Toll hike – Just let it be

07 May 2021 / 10:01 H.

THE government has decided yet again to postpone another round of toll hikes at major highways to next year, with the rationale being to ease the people’s burden due to the rising cost of living.

Delaying the toll hikes, which were supposed to take effect on Jan 1 this year, as usual is a very expensive affair.

The total estimated compensation to the toll concessionaires would amount to a whopping RM2.25 billion!

This includes the North-South Highway (PLUS), the country’s largest and oldest toll concessionaire, Duta Ulu Kelang Expressway (DUKE), Damansara Puchong Highway (LDP) and the Maju Expressway (MEX).

The most recent hike was in 2015 where 18 highways had increased the rate ranging from only 50 sen to RM1.

In 2019, the government put a freeze on the toll rate hike for 21 highways, including the DUKE, MEX and LDP, and this alone cost RM972 million.

I take the liberty here to propose to the government to seriously revisit its policy on postponing or freezing the periodical toll hikes as stated under the concession agreements with privatised highway operators.

The move was and is clearly a populist or politically motivated one, but when it’s just between 50 sen and RM1 and at a five-year interval it’s hardly a burden to toll users. Actually, it’s no big deal.

But it does punch a big hole in the government’s budget, especially when the country is virtually cash-strapped over the past one year trying to balance lives and livelihoods amid the Covid-19 pandemic.

It’s been over 30 years now since Malaysians on the mainland have been passing through the ubiquitous toll plazas, including the inter-city ones, and paying highway toll is very much a way of life.

The public has fully accepted having to pay for using the more convenient toll highways – and the hike when it’s due – which saves them a lot of time and expenses.

So why is the government so adamant in paying this 50 sen or RM1 on their behalf by not allowing the toll operators to increase the rate?

For example, in this latest round of deferring the toll hike to next year the RM2.25 billion that the government is allocating as compensation to the concessionaires could instead be used to procure additional vaccines to contain the pandemic, thus enabling more Malaysians to be vaccinated faster than at the current slow pace.

Due to the strained national budget situation, the government now has to dig into the sacred National Trust Fund for vaccine procurements.

Had the RM2.25 billion that will be used to compensate the toll operators instead been diverted to fight Covid-19, the pressure or even the need to tap into the trust fund would be very much reduced or nothing at all.

Even Prime Minister Tan Sri Muhyiddin Yassin frankly admitted recently that “the government hasn’t got much money left”.

If the latest gesture is with the view, as popularly assumed, that this is an election year it also does not necessarily mean a plus for the sitting government.

For example, just before the 14th general election in 2018, the then Barisan Nasional government abolished the Batu Tiga toll plaza along the Federal Highway, apparently in a bid to win Selangor back from the Pakatan Harapan-led state government in our premier state.

Despite the toll being scrapped, thus ending the daily burden for most Selangor commuters, the outcome of the election showed that BN parties lost more seats and the state government was re-elected with an even bigger majority.

So in this context, it is indeed very difficult to rationalise this latest burst of gesture for toll users in the first place.

Actually, for interstate highways by and large there has been very much less commuting via the toll plazas over the past one year due to the various stages of the movement control order.

What this means is that it’s hardly a burden for commuters.

I would argue that this policy of delaying or postponing toll hikes be done away with as it has proven to be a huge financial drain on the government.

For the past 30-plus years of toll highways, there have been numerous decisions by the government to pay compensation to the concessionaires and the total amount must have come up to tens of billion of ringgit.

Come to think of it, these amounts of compensation would instead be more than enough to cover the costs of building several of these highways.

Just imagine, had the many billions in compensation money been used to construct such highways, several would be government-funded and the rakyat could travel along these highways toll-free instead of the 100% privatised ones.

Then there is also some gross inconsistency in the announcement that the deferred toll hike until next year also includes PLUS highways. PLUS holds a total of five concessions.

According to an announcement by the Prime Minister’s Office on Feb 10 last year during the then Pakatan Harapan government, there will be no further toll hikes on PLUS highways as the concessions have been extended for 20 years from 2038 to 2058.

It explained that the 20-year concessional extension for PLUS is to ensure that PLUS is able to maintain its highways without depending on the government.

This move followed an announcement by the then finance minister Lim Guan Eng of an 18% toll reduction from February last. It’s yet another strange move but financially an ill-conceived one.

It cannot even be considered a populist decision because given the choice all toll users would rather stop paying toll sooner than to pay up until 2058.

Phew! Imagine having another 37 years of paying toll on PLUS highways.

Even those Malaysians not born yet will be quite “old” when the extension expires.

Perhaps it’s worth reviewing the 18% reduction so that the extension can be shortened.

As I mentioned earlier, toll users would rather not have the reduction instead of an exponentially long period of extension.

From the common sense point of view, it is difficult to defend the continuous policy of deferring toll hikes. Even more so, the long extension being granted.

The best option is to just implement the scheduled hikes as per the agreement, otherwise why have this clause in the agreement in the first place?

All stakeholders in the highway toll business should not, in the words of one senior concession executive, “have the mindset of penny wise, pound foolish”. Well said, Sir.


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