[The Malaysian Insider] DAP may ask government to buy PLUS from open market

10 01 2009

~ By Lee Wei Lian

KUALA LUMPUR, Jan 9 – The DAP may recommend that the government buy back the North South Highway toll concession by acquiring PLUS Expressways Bhd (PLUS) shares from the open market.

The current market capitalisation for PLUS is about RM15 billion.

The estimated cost to buy back PLUS under the concession agreement could come up to RM36 billion as PLUS makes about RM1.2 billion in profit that is not taxable and has another 30 years to go under the concession period and the buyback clause takes into account future profits.

The profits are not taxable as PLUS was originally supposed to raise toll rates by 20 per cent per annum.

To reduce this to a ten per cent increase every three years, the government granted them a reprieve from paying taxes.

The toll concessions, which were open for public scrutiny for the first time, have been described as lop-sided in favour of the concession holders as they enjoy benefits such as government guaranteed loans and the ability to raise toll rates dramatically.

Works Minister Datuk Mohd Zin Mohamed said this week that the government does not plan to buy back the concessions for toll highways, although the contracts have provided for the option.

DAP Economic advisor and Petaling Jaya Utara member of parliament, Tony Pua, said that this market exercise to buy back PLUS on the open market could be part of its recommendations to the government, and will be made known once a DAP study committee completes its findings.

The study committee, called “Operation Restore,” is to come up with a report based on studies of the toll concession agreements.

The committee will comprise of Pua, Teh Chi Chang, Teo Nie Ching, Anthony Loke, Charles Santiago and Lim Lip Eng.

Teh is economic advisor the DAP secretary general and former executive director of investment reseach at Citibank Asia Pacific and covered toll highways and Independant Power Producers for 13 years.

Teo, Loke, Santiago and Lim are members of parliament for Serdang, Rasah, Klang and Segambut respectively.

They expect to submit a preliminary report next week to the Works Minister, which will contain their findings and their recommended actions.

A more comprehensive report is to be prepared by the second half of next month.

Article taken from The Malaysian Insider.


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