Toll Cut in Klang Valley

Gud news la kan utk public kalau toll kat kl ni kurang....

however it may create problem somewhere else..esp to the company...investment no more attractive..esp to bondholders yg mostly holding bonds from these companies.....hopefully the gomen can handle this well...

KUALA LUMPUR: The government, in a bid to alleviate the people’s hardship caused by the rising cost of living, has proposed to toll road operators in the Klang Valley to reduce their rates.

Sources said that the Malaysian Highway Authority (MHA) has sent out letters to the concessionaires in the Klang Valley asking them to reduce their rates by between 15% and 20%.

It is learnt that the letters were sent last week, requesting the concessionaires to submit feedback on the proposal.

Listed companies that hold toll concessions in the Klang Valley include PLUS Expressway Bhd, Gamuda Bhd and its associate company Lingkaran Trans Kota Holdings Bhd (Litrak), IJM Corp Bhd, Taliworks Corp Bhd and MTD Infraperdana Bhd. There are a few private toll road operators such as Permodalan Nasional Bhd which has two highways, and the Shapadu Group.

While the quantum of the reduction was stated, there was no mention by the MHA on compensation for operators who adhered to its “request”, sources said.

It is learnt that the MHA is awaiting feedback from the operators before deciding how to implement the reduced toll.

A reduction in toll rates will certainly not go down well with the operators. Their profits will be reduced if the government refuses to compensate them for the lower collection caused by the rate cut.

A fund manager said that an extension on the concession agreement could possibly be one form of compensation if no cash payment is forthcoming from the federal government.

All the concessionaires are bound by contracts. Previously, they were compensated when they were not permitted to raise rates in accordance with the concession agreements. In other words, their revenues were guaranteed to some extent.

Thus, in the past when the concessionaires were not allowed to raise rates, their earnings did not suffer because they were paid compensation.

Some see toll concessionaires as highly profitable entities and they frequently come under attack. However, not all the operators are making hefty profits. Some are actually on the verge of incurring losses due to lower-than- expected traffic flow. Also, some concessionaires do not enjoy the benefit of having periodic review on toll charges.

The Shah Alam Expressway (Kesas), Guthrie Corridor Expressway, Kajang Traffic Dispersal Ring Road and New North Klang Straits Bypass Expressway are among the roads suffering from low traffic volume. A reduction in their toll rate will adversely affect their cash flow.

source: theedgedaily