This article first appeared in The Edge Financial Daily on October 8, 2019

KUALA LUMPUR: Prime Minister Tun Dr Mahathir Mohamad has said the government can sell PLUS Malaysia Bhd to private entities on the condition that the government still participates in the highway owner and operator’s future decision-making.

Dr Mahathir, also Khazanah Nasional Bhd chairman, added that the price has to be attractive too.

“Yes, we can sell. Whatever offer made on PLUS will be studied by the government to determine whether it is suitable to our needs,” he told reporters at the Parliament lobby here yesterday.

Khazanah owns a 51% stake in PLUS via UEM Group Bhd, and the Employees Provident Fund (EPF) the remaining 49%.

At a separate event, Khazanah managing director (MD) Datuk Shahril Riza Ridzuan said as PLUS, which owns the North-South Expressway, is a strategic asset of the sovereign wealth fund, it would be difficult to imagine the company in a private entity’s hands.

“I believe there is a huge moral hazard of having private entities owning such strategic assets with the backing of government guarantees,” he told reporters on the sidelines of the Khazanah Megatrends Forum 2019 yesterday, adding that this is on top of offers from private entities to acquire the asset at a cheap discount.

Noting Khazanah has been in discussions with the government about trying to achieve some of the latter’s goals, he said PLUS — as a strategic asset — should remain in the people’s hands.

He explained that this is so Khazanah can still achieve some of the financial benefits that it is seeking.

EPF open to selling PLUS if ‘there is a good offer’

EPF chief executive officer Tunku Alizakri Alias said the pension fund would consider divesting the highway operator if there is a good offer.

“From the EPF’s perspective, we are a fund that acquires and sells assets. Thus, we would consider the divestment, should there be a proposal benefiting our members and also in terms of dividends,” he said on the sidelines of Khazanah’s forum.

Alizakri said Khazanah had presented a strong proposal, without elaborating.

“As for Khazanah’s plan to bring PLUS forward, as our partner, we believe Khazanah has a strong proposal which can ensure the right ownership of the highway concessionaire,” he added.

At the weekend, Shahril told TV3 in an interview that Khazanah had so far rejected all takeover offers it received from local and foreign private entities for PLUS, saying these parties were offering to buy PLUS at a much lower price than its real value.

It was previously reported that  Tan Sri Abu Sahid Mohamed’s Maju Holdings Sdn Bhd and Hong Kong-based private equity firm RRJ Capital had made offers to buy the highway operator.

The Edge Malaysia weekly last month reported that RRJ, led by Malaysian brothers Richard and Charles Ong, is offering RM3 billion in cash to buy all of PLUS, and if the bid is successful, the company will reduce the toll rates by 20% across the board.

Maju had proposed an effective purchase price of RM3.5 billion, of which RM2 billion will be in cash and the remaining RM1.5 billion a waiver of the compensation due from the government, the report said.

The Edge reported four scenarios for Maju’s proposal. The first entails a 25% reduction in toll rates, which would see Maju getting a 10-year extension to the 2038 expiry of PLUS’ concession.

The others involve Maju offering a 30% toll reduction with an extension of the concession for 15 years, or until 2053; a 33% toll reduction if the concession is extended for 20 years; and a 36% toll reduction for a 30-year extension until 2068.

However, on July 12, Finance Minister Lim Guan Eng was quoted as saying the government had rejected Maju’s initial proposal to take over PLUS, following objections from Khazanah and the EPF.