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Lim Guan Eng: No toll on LDP, Sprint, Kesas and SMART during off-peak hours after highway acquisition

Following the report that the Malaysian government will take over four major highways in the Klang Valley, the Ministry of Finance has issued a statement which elaborated its new highway congestion charge system. This is seen as a move by the current administration to fulfil its election promise.

To recap, the Ministry of Finance has offered to acquire four highway concessions which cover Lebuhraya Damansara Puchong (LDP), Sistem Penyuraian Trafik KL Barat (SPRINT), Lebuhraya Shah Alam (KESAS) and SMART Tunnel (SMART) for a sum of RM6.2 billion. The offer is subject to due diligence, approval of shareholders and creditors for each concessionaire as well as final approval by the Cabinet.

According to Finance Minister, Lim Guan Eng, there will be a new congestion charge system which will save as much as RM180 million per year for commuters and the savings will go into the disposable income of Malaysian households.

The congestion charge will offer a variable pricing structure based on the time of the day. During peak hours, the maximum congestion charge will be capped at the current toll rate. The Government will give discounts up to 30% for hours outside the peak periods and commuters can enjoy free travel during off-peak periods. The government has yet to finalise the structure of the congestion charges which is targeted to be implemented on 1st January 2020.

The Finance Minister also added that the acquisition of the highway will also save RM5.3 billion to compensate the toll concessionaires in order to freeze further toll hike until the end of their respective concession periods. He added that these figures proved that the current toll concession model had only profited private concessionaires and did not prioritise the people’s best interest.

SEE ALSO:  Budget 2020: 18% discount for PLUS highway tolls, toll-free on 4 KV highways during off-peak hours

The statement also emphasised that the offer will not cause any financial burden to the Government and a special purpose vehicle (SPV) that’s wholly owned by the Ministry will finance the offer by issuing bonds. It also added that the collection of the congestion charges is sufficient to service the debt and to finance the operation and maintenance of highways without additional budget required.

It is mentioned that the four highways have a 48% market share of all urban toll roads (excluding PLUS) and it presents a significant share of intra-city highways. If this acquisition model is successful, the Government will apply the same model to acquire the concessions of other tolled highways including inter-city networks.

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Alexander Wong