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Govt offers to take over LDP, Sprint, Kesas and SMART for RM6.2 billion

The Malaysian government is in the process of acquiring four toll highways in the Klang Valley with an offer of RM6.2 billion. This includes highways from Gamuda Bhd and Lingkaran Trans Kota Holdings (Litrak Holdings). According to MalayMail, it will cost the government RM4.5 billion after deduction of outstanding indebtedness.

The highways include Lebuhraya Damansara-Puchong (LDP), Sistem Penyuraian Trafik KL Barat (Sprint), Lebuhraya Shah Alam (KESAS) and the Stormwater Management and Road Tunnel (SMART).

It is reported that the companies have received the purchase offer from the Ministry of Finance Incorporated (MoF Inc) and it is expected that RM1.23 billion will go to Kesas, RM870 million for Sprint, RM2.34 billion for Litrak and RM60 million for SMART. Gamuda is expected to receive RM2.36 billion from its effective interest in these four toll highways.

These offers will be valid until 12 July 2019 and are subject to satisfactory due diligence findings and approval of the Cabinet. It is reported that the offers will be overtaken by a special purpose company that’s wholly-owned by MoF Inc.

It appears that the government is in the process of fulfilling one of its election manifestos that promise to abolish tolls. After the election, Prime Minister, Tun Mahathir, had said that toll-free highways were not possible and the government would need to review its pledges as some would impose great losses if implemented. He previously had warned that the only way to have freeways and no toll is to raise the price of petrol. If the highway takeover gets passed by the Cabinet, it isn’t clear if tolls will be abolished completely or perhaps we could see a reduction in toll charges.

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Alexander Wong