Teo: Najib betrayed the people on toll rates

The people are already heavily burdened by GST and the massive ringgit depreciation.

KUALA LUMPUR: Prime Minister Najib Razak has betrayed the people by increasing the toll rates on 18 highways, especially when most of the concessionaire companies were reaping huge profits even before the toll hike, said Kulai MP Teo Nie Ching in a statement. “The concession agreements with the toll operators are also lopsided.”

“Who should we blame for the lopsided agreement if not the ruling Barisan Nasional (BN)?”

She demanded to know the mechanism used to calculate toll rates and returns on investment for the concessionaire companies when the agreements were signed.

The MP lamented that Najib had allowed the highway companies to increase the toll rates when the people were already heavily burdened by Goods and Services Tax (GST) and the massive ringgit depreciation.

New Pantai Expressway (NPE), constructed, operated and maintained by New Pantai Expressway Sdn Bhd (NPESB), a subsidiary of the IJM Corporation Berhad, she added, was an example. “The concession period had commenced on September 12, 2016 and is for 33½ years. Development costs for the highway was approximately RM1.3 billion.”

According to the Annual Reports of IJM Corporation Berhad, she pointed out, pre-tax profits for NPE from 2008 till March 31, 2015 was RM243.81 million. “It was also revealed in the 2009 Annual Report that cash compensation of RM184 million was paid by the government for deferring toll hikes, reducing toll fares for Class 5 (Bus) by 50 per cent in September 2008 and abolishing NPE’s PJS 2 (KL Bound) toll plazas in February 2009.”

“The 3-year and 5-year average pre-tax profit growth for NPE are higher than 30 per cent and 25 per cent respectively.”

Without taking into consideration current and future toll hikes, she continued, it’s envisaged that NPESB would record a profit of RM15.109 billion at the end of the concession period.

In other words, said the MP, IJM and its subsidiary NPESB will not only be able to cover its costs for constructing the NPE, but also gain lucrative returns by the end of the concession period even if the toll remained at its current rate.