Toll rate talks to be completed in 2 months

Posted by SM Maulana

KUALA LUMPUR, June 17 — The government’s negotiations with toll concessionaires on the possibility of reducing toll rates are expected to be completed within two months, Works Minister Datuk Mohd Zin Mohamad said today.

“We are very serious in engaging negotiations with the toll concessionaires,” Mohd Zin said when asked to comment on the progress being made.

“It has been progressing very well. I can said that it is a serious concerted effort by the government to reduce the toll burden on the people and I’m looking forward to that,” he said.

He was speaking to reporters after opening the International Conference on Construction & Building Technology 2008 here.

Last month, the government announced its plan to review highway concessions, with the possibility of toll rates being reduced depending on the outcome of a study on the highway concessions being carried out by the Works Ministry.

It is learnt that the study will involve the basis of renegotiations on the concessions between the government and the toll concessionaires.

The first matter to be discussed will be the toll review mechanism which disallowed the concessionaires from increasing toll rates at will, but to depend on the traffic count.

Asked on the response from the toll concessionaires, Mohd Zin said: “I think they understand the need to soften on this issue.”

An analyst from a local brokerage firm has described the effort by the government to review highway concessions as a bread-and-butter issue.

He said a possible way for the government to take over the concessions was to invoke the expropriation clause in the concession agreements, in which the expropriation clauses were clearly stated that the government must compensate the concessionaires and assume their debts should it decide to take back the concessions.
Posted by SM Maulana

The analyst said the extent of compensation to the concession holders, however, differed, with some concessions like the North-South Expressway (NSE) and Penang Bridge being “watertight” in favour of the concessionaires, in that the government must also compensate for the loss in future earnings besides the investments and other costs borne by the concessionaires.

“Will the government do it? It will not be cheap. We estimate that just to take back the NSE alone, it could cost the government more than RM30 billion to pay off the concessionaire,” he said.

“Our view is that it is not in the best interest of the government to invoke the expropriation clause, business-wise and financially,” he added. — Bernama

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