IT will cost the government RM18 billion to compensate highway operators to freeze toll hikes, Finance Minister Lim Guan Eng has said, while defending the RM6.2 billion proposed move to take over four expressway concessionaires from Gamuda Bhd.

“The proposed acquisition cost of RM6.2 billion will be funded by a bond issuance that is fully financed and paid for from the collection of congestion charges,” the minister said in a statement today.

“This compares with having to pay RM18 billion in compensation for the highways to not collect any toll charges.

“Due to legacy issues from the previous government leading to financial constraints, the federal government cannot afford to fork out RM18 billion.”

On Friday, Gamuda told the stock exchange that it had received offer letters from Minister of Finance Inc (MoF Inc) to acquire its stake in four expressway concessionaires for RM6.2 billion.

MoF Inc has proposed to acquire Gamuda’s 70% stake in its subsidiary Kesas Holdings Bhd, its 52% stake in its associate company, Sistem Penyuraian Trafik KL Barat Holdings Sdn Bhd (Sprint), and and 50% stake in the joint venture Project Smart Holdings Sdn Bhd (Smart).

Lim reiterated the deal would offer RM5.3 billion in savings for the taxpayers to, which would otherwise be used to compensate toll operators.

“I outlined the benefits of the acquisition, including at least RM5.3 billion in compensation payments that would be saved by the government and up to RM180 million in annual toll savings for the highway users.”

Up to 30% discount will be given for travel outside peak hours.

Lim said the funding of the acquisition by way of bond issuance and the RM5.3 billion savings on compensation payment was a win-win situation.

Lim said this was on the rationale behind acquiring the highways immediately, as opposed to waiting for licences to expire, was helping commuters save RM180 million per annum.

“Second, the concession period will not be lengthened and will expire in accordance with the existing concession agreements.

“Upon expiry, the congestion charges will be further reduced significantly to cover only the operating and maintenance costs, without any profit element.”

Veteran newsman A Kadir Jasin took to his Facebook yesterday to question the government’s move of acquiring the assets, given they would eventually be returned to public ownership.

Meanwhile, The Malaysian Insight reported today that a study commissioned by the Works Ministry on the feasibility of the move was against the takeover.

According to sources, the study instead recommended an alternative mechanism.

Lim said that the conditional offers served by Mof Inc to shareholders and creditors of the four highway concessionaires would still be subject to cabinet approval.

The cabinet, he said, had given in-principle approval on February 27, while Prime Minister Dr Mahathir Mohamad approved the conditional offer on June 20.

The conditional offer to Gamuda Bhd is valid until July 12.

“The conditional offer is made after due diligence by professional banking consultants, in line with fulfilling the commitment by the Pakatan Harapan government in its electoral manifesto, to take over highway concessions and gradually reduce toll rates, to ease the burden on the people.” – June 26, 2019.