MRCB hopes to resolve EDL toll issue by year-end

KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) will work with the new government to resolve the termination of the Johor Bahru Eastern Dispersal Link’s (EDL) concession by year-end.

Executive director Mohd Imran Mohamad Salim said the new government is keen to abolish or reduce tolls and MRCB is at the forefront of that, having already abolished the toll entirely. The firm stopped collecting the RM6.80 per trip toll since the start of 2018.

“Now we will work with the new government to finalise the formula and we are hopeful we can try to resolve it by end of this year,” he told reporters after its AGM and EGM today.

He said prior to the general election, MRCB and the previous government had agreed upon a mutual termination and MRCB had surrendered the highway, which is already a non-toll road being operated by the Public Works Department (JKR).

“We were supposed to sit down with the federal government to come up with a formula on how we want to resolve the matter. So, it’s just coming up with a fair and transparent formula for all parties to exit fairly and reasonably,” he added.

He declined to comment on the value that it may gain from the mutual termination but is hopeful that it would at least be able to pay off most of its debts on the 8.1km EDL, which was built at a cost of RM1.2 billion.

MRCB reduced its gearing to 0.53 times at end-2017 and hopes to reduce it further to 0.2 times or lower this year if the termination of the EDL concession is resolved.

To recap, the previous government had announced under Budget 2018 that it would compensate PLUS Malaysia Bhd and MRCB for the abolishment of toll collection at four locations namely Batu Tiga, Sg. Rasau in Selangor, Bukit Kayu Hitam in Kedah and the EDL.

On whether the change in government would affect its construction orderbook, Imran said it has no exposure to any of the projects that will be reviewed by the new government except for the Kuala Lumpur-Singapore High Speed Rail (HSR).

“Financially there is no impact to us because the project has not started and we’ve not booked in for 2017 or 2018 in terms of any income revenue,” said Imran.

MRCB, under a consortium with Gamuda Bhd, had accepted a letter of appointment from MyHSR earlier this month to act as the project delivery partner for the northern section of the project. MyHSR had said that it would start works by year-end.

As for the KL Sports City project, MRCB is waiting for the new government to decide what it wants to do with the second phase.

“The government has two options. Either we proceed with Phase 2 or I’ll just give them the cash difference...We leave it to the ministry and government whether they want to build additional buildings or the cash is there, they can just take the cash in return. I will leave it to the government to decide,” said Imran.

MRCB has an order book of RM6.2 billion (external projects, excluding projects from its property division), of which about 23% are government projects. It has a tender book of RM2.9 billion and based on its track record, its success rate is close to 20%.