MCA moots buy-over of highway operator Plus
MCA has mooted a proposal for the government to buy over Plus, which operates the North-South Highway under a 50-year concession agreement.
MCA has mooted a proposal for the government to buy over Plus, which operates the North-South Highway under a 50-year concession agreement.
Conceding that there are disadvantages to taxpayers in the highway concession agreement, MCA spokesperson Lee Wei Kiat said today that the party feels it would be in the best interests of the people for the government to acquire the remaining shares of Plus.
Youth Legal Affairs and Parliamentary Research Bureau head Wong Nai Chee explained that party representatives had scrutinised all 22 highway concession agreements that had been declassified on Jan 1. A key conclusion was the benefits of acquiring Plus Bhd.
After getting the nod from MCA president Ong Tee Keat, a formal proposal was submitted to the party's powerful central committee (CC).
The CC meeting of March 25 approved the proposal and vice-president Liow Tiong Lai has been assigned the task of conveying the party’s suggestion to the works minister.
Opposition party DAP has long called on the government to buy back toll-highways from the concessionaires, while BN component party Gerakan has asked for a review of all the toll agreements to overcome lopsided provisions that favour the concessionaires.
Revealing the MCA proposal at a press conference at the party headquarters in Kuala Lumpur this morning, Wong (right in photo) also said the MCA would utilise other avenues - such as the BN management meeting and even the cabinet meeting - to push through its proposal.
He noted that the government already holds an effective interest of 74 percent in Plus Bhd through Khazanah Nasional Bhd and the Employees Provident Fund (EPF).
“Assuming a share price of RM3.50 to RM4 per share is offered for the acquisition of the remaining shares, the total acquisition price would be between RM4.55 billion and RM5.2 billion.”
The government, he said, could acquire the highway operator through Khazanah, and will thus hold a 100-percent stake in the company.
In doing so, the government can alter Plus’ profit-oriented policy to make it “more socially responsible”, such as by eliminating increases in toll charges.
No financial burden
The acquisition of Plus would have short- and long-term benefits, added Wong. Furthermore, the takeover would not burden the government financially, since the company is making profits.
“Plus has been generating profits of RM400 million to RM600 million yearly in the financial years 2004-2007, even when gross compensation by the government (for not increasing the toll) is excluded,” he said.
“As at Dec 31, 2008, the company’s long-term borrowing amounted to RM9.4 billion, while the dividend announced for the 2008 financial year 2008 was RM725 million.
“Therefore, if Plus channels its dividend to repay debts, it can easily settle its long-term borrowing in 13 years.”
Asked what he sees as the main obstacle in getting the MCA proposal on board, Wong hinted that it could meet opposition from its partners in the ruling coalition.
He said while the acquisition is feasible in terms of economics and rules, “what we now have to do is to convince other (BN) component parties”.
“We have our own stand. Whether they will accept or not, we don’t know, but we will try to persuade them to agree.”
In terms of the timeframe for the proposed acquisition, Wong said: “We haven’t touched on that. But what is important is that we must have a stand.
“The acquisition is the right move. It’s beneficial to the people. What’s left is just mere detail and working out the procedures.”
Lee stressed that the MCA’s stand is based on the party’s policy to boost the economy and to help the people, especially in times of financial difficulty.
