Gamuda has confirmed that operators of the LDP, Kesas, Sprint and highways – which Gamuda has stakes in – have sold their concessions to Amanat Lebuhraya Rakyat Bhd (ALR), a non-profit company with a paid-up capital of just RM 5,000.
The deal is worth about RM 5.48 billion, which ALR says will be paid by loans and Sukuk issuance.
Although the arrangement has raised eyebrows, response from the financial market has been generally positive, with many industry players agreeing that it is a win-win-win arrangement for highway operators, government of Malaysia, and highway users.
Highway operators have been dealing with losses for many years; while the government is stuck in a quagmire of repeatedly having to pay compensations to highway operators in return for them freezing hikes in toll rates, as agreed in their contract; meanwhile highway users continue to be burdened by high toll charges with little / no improvement in traffic congestions.
On criticisms of how highway concessions worth over RM 5 billion can be taken over by an unknown company with merely RM 5,000 in capital, the Works Ministry has since responded by saying:
“The role of the ALR is solely as the custodian of the four highways. Prospective Sukuk investors (or Sukuk subscribers) need confidence to invest (for returns) and as such, the ALR consists of corporate figures who are not affiliated with any political party. This allows ALR with a capital of only RM5,000 to act as ‘guardian’ of the four highways.”
There’s also the issue of concessions extension for ALR. Originally, the concessions period for the 4 highways will end in 2028 for Kesas, 2030 for LDP, 2034 for Sprint, and 2042 for SMART.
The new agreement with ALR allows for an extension of the concessions, triggering another round of criticisms.
The Works Ministry explained that the extension is only meant to assure investors, and that the government could end the concession period at any time, subject to its financial position.
It also emphasized that the terms of the extension is not exclusive from highway traffic and higher actual traffic will reduce the extension period.
ALR is obligated to return the 4 highways to the government as soon as the debts are cleared.
ALR says the agreement allows the government to save RM 4.3 billion in compensations to highway operators, while motorists will save RM 5 billion in toll hikes.
Keyword: LDP, Kesas, Sprint, and SMART highways sold to a RM 5k company, promises no toll hikes