Sunday
Concession" On Toll Concessions - Insulting The Common People
OutSyed The Box
Sunday, February 24, 2019
"Concession" On Toll Concessions - Insulting The Common People
The way this toll thing is being handled is perfectly reflective of how the country's economy has been messed up and screwed up.
Monopolies are involved. Malaysia is the only country in the world where the government(s) and their sychophants insist that monopolies are very good for you. It reminds me of this old ad for Guinness Stout.
Macam itu juga monopoli pun 'baik untok kita'.
This can become a new branch of economics - we can call it Malaysian Auta Economics. Maybe one day someone here will be awarded that "becoming even more elusive" Nobel Prize for discovering 'Malaysian Auta Economics'.
There have been some statements about the toll operators and the toll concessions over the past few days. The Semenyih elections are less than 10 days away. More incoherent pronouncements and announcements will be heard between now and then.
Folks, just like before, there are government sanctioned monopolies involved.
So you do not stand a chance.
Big corporates are involved in the toll roads - from the old crony connections.
If there are any goodies to be dished out, they will get taken care of first.
You and I will come last.
The Civil Servants who look for post retirement "directorships" in big companies are involved, in one way or another.
They have vested interests and you cannot trust them.
The peoples' interests, the interests of the economy as a whole is being put in the tong sampah.
I am referring these two reports in The Star and making my comments as I go along.
https://www.thestar.com.my/news/nation/2019/02/23/rough-road-ahead-for-govt-say-highway-operators
Rough road ahead for govt, say highway operators
govt has to navigate tough terrain to lower or abolish toll say concessionaires
(OSTB : Well of course that is what they will say. These are toll operators. They want to extract the maximum amount of 'compensation' from us the taxpayers.)
An official said no clauses in agreement to reduce or abolish toll charges
concessionaires have loans to service and other bills to pay
government cannot force them to abolish rates without compensation
compensation issue would definitely come into play.
Does country have enough money to compensate operators ?
the amount may run into billions?”
OSTB : I dont believe these buggers. The biggest elephant in the room is PLUS. To give you an idea of their twisted sense of entitlement - because that is what it is - they say they are the largest toll operator in South East Asia, and number 7th or 8th in the world. WRONG. They are the largest toll monopoly in South East Asia - they are the largest toll oppressor that makes the people poorer in South East Asia.
The concession went from 33 years plus another 12 years = 45 years !! (You can read it here.
Here is some trivia about the N-S Highway.
Of the 870 km or so of the North South Highway, the government built 370km at a cost of RM3.32b.
The land acquisition costs were fully borne by govt.
That is 42% of the N-S Highway.
UMNO company UEM (at that time) built the remaining 500km for RM3.5b.
Again the land acquisition cost was fully borne by the government.
Then the government even funded half (RM1.65b) of UEM's initial budget of RM3.5b.
Wow!! Baiknya kerajaan kita.
I recall the first round of financing for the N-S Highway was over RM1.0 billion.
Then there was a cost overrun and the second round of financing was about another RM2.0 billion, give or take a billion in total.
And the loans did not go beyond 15 years. This means the majority of the PLUS loans should have been paid off by about 2010. Hutang besar sudah bayar lah.
The whole highway did not cost more than RM9.0 billion for UEM / PLUS. Even if they had to repay the RM3.5b to the government for that 370km stretch (I doubt they paid back anything).
Then .. jeng ..jeng .. jeng .. listen to this. This is from 2007.
This is a Press Statement by YB Lim Guan Eng about Samy Velu claiming that the toll highways were worth RM500 BILLION !! Ayoyo Samy !
Datuk Samy Vellu must prove that he is telling the truth that it would cost the government RM 500 billion to buy over all highway companies when Plus Expressways Bhd's(PLUS) concession assets amount to only RM 8.8 billion in 2005
Press Statement
by Lim Guan Eng
(Petaling Jaya, Tuesday): Works Minister Datuk S. Samy Vellu must prove that he is telling the truth that it would cost the government RM 500 billion to buy over all highway companies when Plus Expressways Bhd's (PLUS) concession assets amount to only RM 8.8 billion in 2005. DAP can not understand how Samy arrived at this RM 500 billion to buy over all the highway companies when the construction cost of PLUS, the largest concessionaire which operates the North-South Highway, is only RM 8.8. billion.
The Star reported on 10 February 2007 that ,
"As at end 2005, Plus Expressways Bhd had RM8.8bil in concession assets. This mostly comprised expenditure (including interest charges) to build and upgrade the expressways and represented almost 99% of its non-current assets."
PLUS only spent RM 8.8 billion to complete the North-South Highway due to two reasons. One, a portion of it was already built and completed by the government and simply handed over to PLUS. Two, PLUS was completed in the 90s' when construction cost and materials was much cheaper and had not risen many times as now. Clearly PLUS has benefited greatly from such preferential contracts.
OSTB : Here is a 2010 study conducted by MAMPU on the total cost of taking over all the toll higways:
A 2010 study by the Performance Management and Delivery Unit estimated overall costs to take over all highways in the country to be RM383.3bil.
That total comprised costs to take over the highway concessionaires (RM45.2bil) and costs to abolish toll collection (RM338.1bil).
OSTB : This does not make sense. Of the RM383 billion, the highway concessions themselves only cost RM45.2b in total.
However a super extra RM338.1b is needed to abolish toll collection (compensate for loss in revenue lah) !! Banyak cantik.
So the N-S Highway cost a total RM8.8 BILLION.
Debt financing would not have exceeded RM4.0 Billion.
And jeng..jeng..jeng, for your information folks, when PLUS was listed its highest Market Capitalisation on the stock market never went beyond RM25 Billion.
This means if the government had RM25 billion, they could have just bought over the entire PLUS for RM25 billion.
Plus the government is still the major shareholder in PLUS.
So how did you get RM338 billion, RM500 billion (ok ok for all 29 toll companies) when your market capitalisation for PLUS (for example) never went beyond RM25 billion??
PLUS is the single largest toll operator.
The other 28 are kuchi rat toll operators.
Are you saying the kuchi rats are worth RM238b - RM25b = RM213 BILLION ??
Or RM500b (Samy Velu's figure) - RM25b = RM475b ??
Are you all also Malay Studies graduates?
Dec 12 last year, government froze toll hikes for 21 highways
paid RM972mil compensation
no toll for motorcyclists along Penang Bridge, Second Link RM20mil
freeze toll hikes for Class 5 vehicles and buses on eight highways.
cost government RM1.68mil annually
MRCB received RM1.325bil settlement for JB Eastern Dispersal Link Expressway.
A 2010 study by the Performance Management and Delivery Unit estimated overall costs to take over all highways in the country to be RM383.3bil.
That total comprised costs to take over the highway concessionaires (RM45.2bil) and costs to abolish toll collection (RM338.1bil).
Read more at https://www.thestar.com.my/news/nation/2019/02/23/rough-road-ahead-for-govt-say-highway-operators/#8v2w7U5P1J5ALM2o.99
OSTB : Ok there are legal structures.
The government is the largest shareholder in PLUS.
And the government has the power of legislation.
The government can pass laws.
FIRST HERE ARE SOME NASTY IDEAS FOR THE GOVERNMENT :
The government can build new alternative highways.
Or just 'announce' the building of new highways.
Or build flyovers and add extra lanes to existing roads to be as good as or better than the toll highways.
The toll operators will immediately get on their knees.
Jangan main. I would do this.
The government can introduce special taxes for the toll road companies.
Cannot? Why cannot?
The government has special taxes on gambling (Genting), cigarettes and liquor.
So what is so special about the toll operators?
Want to be more nasty?
The government can levy a 'revenue tax' on toll highway operators.
(Again if we can levy special taxes on cigarrettes and liquor, then we can levy special taxes on toll operators)
Then take these tax receipts and use it to compensate for lower tolls.
No one will rugi. No one will commit suicide.
That is rule no. 1.
But long, long before that do you know what will happen?
Those arrogantly stupid figures like RM338 billion, RM500 billion etc will come tumbling down. That is what will happen.
Dont play-play with the power of the government.
But only if it is a good government.
If the government is also populated by pirates, then this will not work.
The people will get screwed.
This is what is happening now - under the Pakatan government.
Do read on.
Here is more news from The Star.
About insulting the common people.
Christmas coming very early for Gamuda.
Government talks with Gamuda to negotiate acquisition of four highways
(LDP), (SPRINT), (KESAS) and SMART Tunnel.
Upon successful takeover Govt intends to abolish existing toll
(OSTB : On these four highways. What about the N-S Hiway?)
However, “congestion charge” equivalent to existing toll during 6-hour “peak” period
“off-peak” periods 11pm - 5am, travel on highway for free
other ‘normal’ travelling hours, discounts up to 30% compared to existing toll
“congestion charge” used for operations, maintenance, repay borrowings
Read more at https://www.thestar.com.my/news/nation/2019/02/23/government-in-talks-with-gamuda-to-take-over-four-toll-concessions/#eswpXhFcT6WkzZ0t.99
(OSTB : So what happened to Baru Bian's toll concession study supposed to be ready by June 2019? Baru Bian the Works Minister has been short circuited.
My point is - if the government wants to, the government CAN SHORT CIRCUIT ANYTHING.
THIS IS EVIDENCE ENOUGH FOR THE POINT I AM TRYING TO MAKE.
THE GOVERNMENT IS ALL POWERFUL.
And which highways are we talking about here?
THE FOUR GAMUDA HIGHWAYS ONLY?
THE NORTH SOUTH HIGHWAY ?
PLEASE BE CLEAR.
DO NOT MAKE FUN OF THE PEOPLE.
DO NOT INSULT THE PEOPLE.
But .. .. .Alamak !! Its back to square one isnt it?
First you take taxpayers money and give Gamuda an early Christmas present.
Then you get the taxpayers to suffer "congestion charge" aka suffer the same toll rates - FOR SIX HOURS DURING PEAK PERIODS DAILY.
YAB / YABhg / YB / whoever lah - its like this ok.
School starts at 7 am.
Parents send their kids to school about that time.
That is why it is called the PEAK PERIOD.
Parents are not going to wake up their children at 4 AM and send them to school BEFORE 5 AM JUST TO AVOID PAYING TOLL on the Gamuda highway !!
SO PLEASE DO NOT INSULT THE PARENTS OF SCHOOL GOING CHILDREN.
WILL YOU WAKE YOUR KIDS AT 4 AM AND SEND YOUR KIDS TO SCHOOL BEFORE 5AM JUST TO AVOID PAYING THE TOLL?
YOU WILL NOT.
SO PLEASE DO NOT INSULT THE PARENTS.
Government offices start work at 8 AM.
The private sector starts work at 9 AM.
Banks open at 9:30 AM.
THIS IS WHEN PEOPLE WILL TRAVEL.
THAT IS WHY THESE PERIODS ARE KNOWN AS PEAK PERIODS.
There is no point for Civil Servants, private sector employees, business people who have banking matters to do - to start traveling before 5 AM just to NOT pay toll. Jabatan kerajaan tak buka sehingga 8 PAGI. Businesses start at 9 AM. Banks open at 9:30 AM.
Then you are saying these people will still pay PEAK PERIOD TOLLS - 'CONGESTION CHARGES'.
So as far as the rakyat is concerned there will be no change.
They still suffer the same tolls at PEAK PERIODS.
“off-peak” periods 11pm - 5am, travel on highway for free
(OSTB : Thank you very much. Have you informed Count Dracula? I am informed that Count Dracula usually travels between these times. He will be most happy and will certainly vote for you at the next elections. I have no wish to join Count Dracula. For a simple reason - between 11pm and 5am I am usually asleep at home.)
other ‘normal’ travelling hours, discounts up to 30% compared to existing toll
What is the meaning of this "up to 30%" ?
5%? 10%
Does this apply to the N-S Highway?
Please answer Yes or No?
That is the biggest elephant in the room.
Conclusion:
The real issue is company valuation.
How much do you value these toll operators?
The toll operators are possibly using simple arithmentic.
My net +ve cashflow is say RM1.0 B per year.
My concession ends in 2030 - 11 years away.
So 11 yrs x RM1 billion = RM11b.
Plus my assets RM8b = RM19b.
Throw in a premium = RM5.0b
Throw in my debts = RM xx
Total say = RM24++ billion.
This is where THREE factors have a big say in HOW TO VALUE THESE TOLL OPERATORS
1. Please refer my list of NASTY THINGS the government can do.
2. The government is the largest shareholder (in PLUS)
3. Where do the pirates sit? Inside government, outside government, one foot here, one foot there?
The issues become clearer when the peoples' interests take pre-eminence.
Obviously they are not.
Syed Akbar Ali at 10:16:00 AM
1 comment:
AnonymousSunday, February 24, 2019 10:23:00 AM
https://www.bharian.com.my/berita/nasional/2019/02/534188/caj-kesesakan-akan-ganti-kutipan-tol
Apa punya news la... patutnya waktu orang pergi kerja la bagi tol free. Ini waktu orang pergi clubbing kau bg free tol !!
Xr
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Syed Akbar Ali
Kuala Lumpur, Malaysia
E mail : ali.syedakbar@gmail.com Professionally in descending historical order a Blogger, Advisory Panel - Malaysian Anti Corruption Commission, businessman, property developer, author (three books todate), company director, newspaper columnist, NEAC economic consultant and banker. Also less erratic TV appearances and political analyst. Main interest: Malaysian peoples' scientific, industrial, economic and social advancement. Everything else is disposable.
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