Friday, March 31, 2023

Works Ministry clarifies that highway users do not have to pay toll forever after restructuring

NewsWorks Ministry clarifies that highway users do not have to pay toll...

The Works Ministry (JKR) has refuted claims of highway users will be paying toll indefinitely following the restructuring of four companies with an extension of the concession period.

In a statement, the ministry said concessionaires cannot add on new debts at its discretion and this is enshrined in the new agreement involving the recent restructuring of the four concessionaires.

“The government will always ensure that consumers are not burdened.”

“If this restructuring is not allowed in order that the government can save on compensation, then the toll rate increase has to be given, which will then cause a chain reaction where the cost of goods will increase as well,” the ministry said.

Earlier this week, Prime Minister Datuk Seri Ismail Sabri Yaakob announced that toll rates on 4 highways will be maintained until the company’s concession period ended.

The 4 highway concession companies are Kesas Sdn Bhd which manages the Shah Alam Expressway (Kesas), Stormwater Management and Road Tunnel (Smart), Western KL Traffic Dispersal System Sdn Bhd or Sprint, and Lingkaran Trans Kota Sdn Bhd (Damasara-Puchong Highway or LDP).

Source: NST Malaysia

JKR also said the alleged fixed cost for the construction and maintenance of the highways and the extension of the concession period had always been a concern among Malaysians.

“This is a false and misleading statement. The government has never paid or provided allocations in the form of fixed costs for the construction or maintenance of the highways.”

“Construction was done using funds obtained by the concession company through loans or the issuance of sukuk which must be repaid through toll collection while the operation cost and maintenance is covered through toll collection,” it added.

In the statement, the ministry also clarified that the extension of the concession period was given only as an indicator to assure sukuk holders that their investment will be repaid.

“The earliest expiration date is six more years, which is 2028 for Kesas; another eight years to 2030 for LDP; another 12 years to 2034 for Sprint; and another 20 years which is 2042 for Smart. This is enshrined in the existing concession agreement. In this structuring, the extension given is not exclusive (to any of the concession companies),” it said.

Following this restructuring, the toll rate will remain the same for a further period. Furthermore, the government will also have the option to end the concession period at any time subject to its financial position to avoid an increase in the price of goods due to a rise in the toll rate.

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