This article first appeared in The Edge Financial Daily on January 16, 2020

KUALA LUMPUR: The Cabinet at its meeting yesterday decided not to sell PLUS Malaysia Bhd. The country’s biggest highway concessionaire will remain with its current shareholders Khazanah Nasional Bhd, which owns a 51% stake, and the Employees Provident Fund (EPF) with a 49% stake, according to sources.

This ends the long-drawn speculation on which private company will win the race to own PLUS that operates five concessions, including the 772km North-South Expressway, the Penang Bridge, and the second Johor-Singapore crossing.

Nonetheless, to fulfil its manifesto, the sources say that the government wants to restructure the concession agreements held by PLUS with the aim to reduce toll rates.

On Jan 9, Finance Minister Lim Guan Eng said the government is sticking to its decision to freeze toll hike nationwide this year even though this will cost the government over RM1 billion to compensate the concessionaires.

In 2019, the government spent RM994.43 million to freeze toll hikes involving the country’s 21 highway concessionaires.

The government had previously announced that it has received four offers to privatise PLUS, ranging from RM3.5 billion to RM5.3 billion, each with a different arrangement on the concession period and toll charges.

Khazanah managing director Datuk Shahril Ridza Ridzuan told the media on Tuesday that the four offers have undervalued the highway concession.

In the same vein, Shahril pointed out that neither Khazanah nor the EPF has put PLUS up for sale while adding that both Khazanah and the government are on the same page when it comes to PLUS’s valuation.

Separately, Khazanah said in a statement yesterday that the government has been engaging the shareholders of PLUS with the objective of reducing the burden of tolls on highway users, relieving the government of compensation pressures, as well as respecting the value of the highway concession for existing debt and equity holders.

“There have also been several unsolicited offers which Khazanah is aware of, although the parties concerned have not directly engaged with us. We have provided advice and viewpoints to the government and have engaged with it to assist in determining policy considerations towards achieving the objectives stated above.

“Khazanah would like to emphasise again that throughout the entire engagement process, the government has been thoroughly professional and has upheld the appropriate governance in striving for the best resolution to the matter,” Khazanah said.

‘Details yet to be finalised for Gamuda-owned highways’

It is understood that the government is still fine-tuning the details of the purchase of the four intra-city highways owned by Gamuda Bhd.

The Cabinet has in principle approved the takeover but details of the deal are still being worked out.

The ministry of finance has announced that the government intends to acquire the highway concessionaires through a special purpose vehicle wholly owned by the Minister of Finance (Incorporated).

The Gamuda-related highway concessionaires in the Klang Valley are priced at the entreprise value of RM6.2 billion. The offer letters were formally handed over on June 21, 2019.

The four highways are Lebuhraya Damansara-Puchong (LDP), Sistem Penyuraian Trafik KL Barat (SPRINT), Lebuhraya Shah Alam (Kesas) and the SMART Tunnel.

It is worth noting, however, that the cut-off date to negotiate and finalise the deal has been postponed thrice. Originally set to conclude by the end of August 2019, the deadline was pushed to the end of October, then Dec 31, and to Feb 28, 2020.

At the time of writing, the government had not issued a statement regarding the Cabinet’s decision on PLUS and the Gamuda-related highway concessionaires.