Make concession agreement public
Memorandum to YAB Perdana Menteri Datuk Seri Abdullah Ahmad Badawi on 27 December 2004
by Committee Against Unfair Toll Increase (CAUTI)
We, the undersigned, members of the Committee Against Unfair Toll Increase (CAUTI), representing a large cross-section of Malaysian society, including members of consumer associations, trade unions, Non-Government Organisations, political parties, women’s organisations, parliamentarians and other civil society groups, wish to register our strongest protest over the 10 per cent North-South Expressway (NSE) toll hike scheduled to take effect on 1 January 2005.
a) The services provided by PLUS do not warrant a toll hike.
The Public Works Minister indicated that the government will have to pay PLUS RM154 million a year in compensation or RM38 billion over the next 33 years if PLUS is not allowed to raise the toll charges by 10 per cent on 1 Jan 2005. The grand toll total of the increase for 33 years at RM154 million a year does not add up to RM38 billion but RM5 billion.
What is the cause for this discrepancy?
The Minister responsible, Datuk Seri Samy Vellu, recently told Parliament that the NSE was built for a projected use of 160,000 cars per day but is now being used by 1,200,000 vehicles per day. This suggests that traffic volume is 7.5 times higher then the forecast volume, which also means an increase in toll revenue of some 7.5 times the forecast revenue.
In such circumstances, with the NSE concessionaire enjoying a windfall of traffic volume and toll revenue so many times more than the original forecasts, it would be a strong justification for PLUS not to increase its toll rate unless it can also substantially improve the quality of NSE services.
c) Why a secret extension to 50 years?
The CAUTI wants to know why compensation must be paid to PLUS for the next 33 years until 2038, when the 30-year NSE concession which started in May 1988 is to end in 2030 after a 12-year extension granted in 1999? With another 25 years for the concession to run and at the compensation rate of RM154 million a year, the total compensation payable until the end of the concession period is RM3.85 billion - one tenth of the Minister’s claim of RM38 billion.
Or has there been another extension of the NSE concession by another eight years, making it a 50-year “cash cow” concession for PLUS from 1988 until 2038?
Malaysians are entitled to know whether, when and why PLUS has been secretly given a 50-year concession from an original 25-year concession offer in 1987 without any transparency and accountability to the Malaysian tax-payer.
When the Minister said that PLUS is entitled to RM38 billion compensation from the government over the next 33 years if it is not allowed a 10% increase in the toll rate, does this mean that in the next 33 years PLUS is entitled to a gross toll collection of RM38 billion from the users of the NSE?
d) Escalating transportation costs
Finally, the local press reported recently that there would be eight more three-yearly 10% NSE toll rate increases in the 42-year NSE concession until 2030, giving the following projections for the NSE toll rate structure.
The NSE toll rate from KL to Bukit Kayu Hitam is scheduled to increase to RM130.70 by 2029. Also, the toll rate from KL-Johor Baru stretch is expected to increase to RM105.20 for the same period; and the toll rate for the entire NSE stretch from JB to Bukit Kayu Hitam is anticipated to escalate to RM230.70. The toll rate increase appears to be staggering and has serious medium- and long-term implications for the Malaysian economy.
e) Government credibility
The government had earlier claimed that the toll structure will not allow for any toll increase until 2016; however, it appears that the NSE concession has been secretly extended. Furthermore, the NSC concession agreement is classified as an official secret nearly two decades after it was signed.
We demand that the concession agreement be made public for public scrutiny. It is important for the government to be transparent with the Malaysian public.
YAB Datuk Seri, we demand that the government instruct PLUS to defer the scheduled toll increase indefinitely until the Government and Parliament conducts a thorough study of the issue. Specifically the impact of an increase in transportation cost - on food prices, small- and medium-scale industries, the cost of doing business in the country, the lower middle classes, the fixed income earners and the poor - has to be studied before the scheduled toll increase is implemented.
Please support our work by buying a copy of our print publication, Aliran Monthly, from your nearest news-stand. Better still take out a subscription now. If you prefer to read our web-based edition, please support our work and make a donation.
Now e-mail us and tell us what you think. Your comments might be published in the Letters section of our print magazine, Aliran Monthly.