How to ensure people are winners in privatising PLUS

There are six bidders for the privatisation of PLUS Malaysia Berhad.

The North South Expressway (NSE) consists of several routes, with the main one from Bukit Kayu Hitam (Kedah) at the Malaysian-Thai border to Jalan Duta in Kuala Lumpur, and a short expressway to Klang, known as the North Klang Valley Expressway (NKVE).

NKVE also provides a direct expressway link from Shah Alam to KLIA, known as ELITE, which joins the southern portion of NSE at Nilai. This southern portion runs from Sungai Besi to Johor Bahru, an alignment that runs all the way to the Johor Causeway.

At Senai, Johor, NSE has a branch route that goes to Iskandar, a new township that provides the second link across to Tuas in Singapore.

Another branch of NSE connects Seremban with Port Dickson in Negeri Sembilan.

Up north, another two short stretches owned by PLUS also includes two tolled bridges to Penang island and the Butterworth-Kulim Expressway.

On the east coast, the newly completed East Coast Expressway between Jabor and Kuala Terengganu is also managed, operated and maintained by PLUS.

The total length of PLUS’ highway network is now about 748 km.

It has been said that the government wishes to reduce the people’s burden of paying toll. This is part of its long term strategic efforts to reduce the cost of living.

By no means the Pakatan Harapan manifesto has called for the total abolition of tolls. However, the coalition promised to work towards reducing or minimising the toll charges and a scheme under this privatisation approach, hopefully, would result in achieving such objectives.

The government hopes to reduce toll charges by 18% or more, with no further increase in the future.

This is commendable, but what else does the government want to achieve by taking the highways private?

In order to meet the PH manifesto and satisfy stakeholders, what should be the evaluation parameters that the government should be looking at?

A fundamental criteria is that there should not be any further extension to the current expressway concession once an agreement ends.

The selected bidders should, therefore, ensure:

  • Their bids are within the balance of the current concession agreement, which has another 19 years;
  • PLUS toll expressways are toll-free at the end of the existing concession period;
  • They do not ask for any government guarantee;
  • They do not ask for extension of time once the current concession expires as it would mean profiteering and against the spirit of PH’s manifesto;
  • Their proposals are financially creative, not hugely profitable but sustainable in terms of operation and maintenance;
  • A reasonable payment to the current shareholders (Khazanah and EPF) for taking over toll collection rights together with the asset life that should not go beyond the current concession period;
  • A lower toll rate for all classes of vehicles with a target saving of 18% or more;
  • They devise a congestion-free easy payment collection method that is not burdensome to users;
  • Improvements on interchanges identified and included in their proposals, as traffic management is critical to the success of their proposals;
  • Better service standard with strategic plan to reduce highway accidents as well as other safety features.

The government should evaluate the bids based on the above criteria or parameters, and reject those asking for extension of concession periods or asking for government guarantee.

The privatisation objectives, on the other hand, are meant to reduce government involvement in managing, operating, maintaining and making further investment in such an infrastructure project. These responsibilities should be transferred to the private sector.

Bidders should also not be another government entity, as it would make a mockery of the entire privatisation exercise where government assets are privatised to another government body.

Extending the current concession beyond 2038, when the current agreement expires, is also tantamount to insulting the government’s objectives, and will add more burden to the public.

The views expressed are those of the author and do not necessarily reflect those of FMT.