KUALA LUMPUR: The government has literally a proposal on its table to take over 15 highways including the North South Expressway (NSE), which it values at a combined RM43 billion.
Sources close to the government said the proposal would result in users being able to save up to 45 per cent over time before benefitting from totally free tolls by 2038.
They said the government would offer to acquire highways owned by Plus Malaysia Bhd including NSE for RM30.8 billion, as well as those by Projek Lintasan Kota Holdings Sdn Bhd (Prolintas) for RM3.1 billion, Gamuda Bhd for RM5.6 billion and IJM Corp Bhd for RM2.7 billion.
The possible acquisitions will be paid via issuance of debt papers to the concessionaires.
“How it works is that Khazanah Nasional Bhd will set up a special purpose vehicle (SPV) called a highway trust, acting on government’s behalf for the purchase of all of the concessions,” a source told the New Straits Times.
The sources said once all parties involved in the potential deals had agreed with the highways’ enterprise value, Khazanah’s SPV would issue perpetual debt papers with one paper valued at RM30.1 billion (Paper A) while the other (Paper B) at RM12.7 billion to the concessionaires in return for the highways.
The Paper B comes with government’s guarantee while the Paper A comes partly in RM10 billion cash, they said, adding that both papers are tradable and carry an annual coupon rate of six per cent or RM1.6 billion.
In a nutshell, the SPV will buy the concessions by RM10 billion cash and RM20.1 billion debt, both via Paper A, and the remaining RM12.7 billion via Paper B.
“This way, the deal, a privatisation initiative, would not burden the government with high debt amounting to RM42 billion unless it pursues with concession buyout,” another source said.
Then, the holder of debt papers could either keep the instrument for recurring income or list/sell the papers onto the market, the source added.
“With this proposal, the SPV’s costs would only be to pay the coupon and maintain the highways. It can later exercise its option to redeem the debt papers from excess cash flow. This way the public can expect free toll in the future," the source said.
The proposal looks to be a better alternative to the Ministry of Finance's proposal to buy out four highways linked to Gamuda for RM6.2 billion, as well as Maju Holdings’ offer to take over Plus.
The MoF proposed to buy Lebuhraya Damansara Puchong (LDP), Sistem Penyuraian Trafik KL Barat (SPRINT), Lebuhraya Shah Alam (Kesas) and the SMART Tunnel for a combined RM6.2 billion. Gamuda owns major stakes in the four highways.
Deputy Finance Minister Amiruddin Hamzah had earlier said the price tag for the takeover was not finalised.
The government is in the midst of carring out due diligence to determine the final value of the highways.
Works Minister Baru Bian reportedly said the Cabinet would decide on the MoF offer by end of this month.
Meanwhile, there were no details of the latest bid by Maju Holdings, but in 2017, it had put in a RM36 billion bid for Plus.