A deal we must closely monitor

By Wong Chun Wai, The Star

The takeover of PLUS Expressways Bhd may seem like a mere corporate exercise but Malaysians need to take stock of what is happening because the outcome will ultimately affect them.

THERE have been so many political side shows over the past one week that ordinary Malaysians may have overlooked reports on the acquisition bid for the multi-billion PLUS Expressways Bhd (PEB), regarded as the country’s most precious and strategic asset.

Whatever the decision, it would affect many Malaysians who use the highway that spans the length of the peninsula. But the drama was only reported in the business section of most newspapers. And except for one news portal, the others had no interest at all.

Last week, it was reported that UEM-EPF remained the only bidders for PEB after unknown Jelas Ulung failed to put in the stipulated RM50mil deposit required to undertake the acquisition and MMC Bhd did not put in their bid.

MMC is the operator of Tanjung Pelepas, the country’s largest container terminal, and Johor Port, and will also be involved in the construction of the MRT with Gamuda Bhd.

In its filing with the stock exchange, MMC said it had not received any indication from the Government on its proposal to acquire PLUS via the acquisition of its parent company, UEM Group. UEM and EPF made a joint offer to buy PLUS and all its business undertakings, including all its assets and liabilities, for RM23bil last October.

What has this seemingly corporate exercise got to do with ordinary Malaysians? Plenty, because it could determine how much we have to fork out for our toll in the coming years. It will also decide how much taxpayers will have to pay PLUS, as a highway operator, each time the Government says there would be no toll hike for the next five years.

A “no hike in toll” announcement may sound like good news, but the reality is that the Government has to compensate PLUS. There is no such thing as a free lunch and government money simply is our money. We wonder why our Members of Parliament even bothered to cheer.

The last time such an announcement was made, it cost us RM5bil, and that did not include the RM2.5bil in outstanding compensation. That, unfortunately, is the current concession agreement between the Government and PLUS.

There is supposed to be a toll rate increase of 10% every three years for the remainder of the concession period until May 2020.

We are all waiting for a time when the Prime Minister says toll rates will not go up or will be waived and it really means that!

The acquisition of PLUS should not be regarded as a business deal in which Malay­sians have no say.

The ordinary rakyat should be interested and follow the matter closely because we will be affected by every decision that ensues.

The show hasn’t ended, so Malaysians can still keep track. Although UEM-EPF is the only bidder, and from the surface it may seem as if all is over, it does not appear to be so.

The North-South highway may seem like a pretty straight road but it does have some twists and turns. Likewise the acquisition of PLUS, and the drama could be starting soon. The side shows include GLC bigwigs threatening to quit their posts, a high-level power play, over-inflated egos, political influences and the kind of behind-the-scenes dealings found only in fiction.

MMC has snubbed the deadline requirements to submit its bid. In short, it is saying we will deal with the Government because our idea has not been rejected by the top.

MMC is saying that if it gets to take over PLUS, it will freeze the toll hike until the concession ends in 2020 and there will be no further extension of the concession period, which ends in 2038.

It claims it can still make money from the deal – even without toll hikes and compensation – if it gets to re-look an existing agreement between PLUS and Propel Bhd, which maintains the highways at a cost of between RM400mil and RM500mil.

It may not be a household name but Propel, or Project Penyelengaraan Lebuhraya Bhd, is the largest highway maintenance company in Malaysia. It undertakes repair and maintenance works along the highways, earning a profit of RM60mil from the contract. Along the way – or highway, if you like – sub-contractors, some with political connections, also acquire millions from this arrangement, it is believed.

There has to be a better way to make things right. That would include unwinding the agreement between PLUS and Propel, so that the former gets to keep the profit. MMC is attempting to convince its powerful listeners that it will cover the shortfall in future revenue.

We need to ask whether there has been enough cost-savings exercises to reduce duplication and wastage in operating the highway.

What MMC has not said so far is that it could be eyeing the land bank along the North-South highway, which is now under-utilised but could be useful and even highly priced for rail link projects.

There is also no serious development of existing rest areas to generate non-toll revenue. In the United States, there are many factory outlets located along the highways and people actually travel to these places to shop.

MMC’s ambition may now have become more expensive; when it submitted its RM15.5bil shares, the share price of PLUS was much lower.

With each passing day, with the drama yet to end, the stakes are becoming higher and tension is increasing.

But for Malaysians, our only concern is whether we will continue to shoulder the burden of toll rate hikes every three years. We are stakeholders too.

The Government has to consider that whoever gets to acquire PLUS must benefit us, the voters, and not just shareholders of the companies involved.

The Government should be relieved of having to pay compensation, at our expense, which really does not benefit us in the end.