Are highway users paying for the RM4.3 billion government savings?

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Highway users are indirectly funding the RM4.3 billion in government savings.

Highway users will ultimately bear the cost of the RM4.3 billion savings achieved by the government. This is because Amanat Lebuhraya Rakyat Bhd (ALR) funded its acquisition of four highways through the issuance of Islamic bonds (Sukuk). The repayment of these bonds, along with the ongoing maintenance of the highways, is to be covered by extending the existing concession periods. Consequently, motorists will continue to pay tolls, indirectly financing the purchase of these assets and the government's reduced fiscal burden.
Extended Concessions Fund Acquisition and Repayment

The acquisition of the four highways by ALR was financed by issuing Sukuk bonds. The terms of these bonds necessitate that the repayment of both the principal and interest be sourced from the toll revenue collected over the extended concession periods. This mechanism effectively transfers the financial responsibility for the acquisition from the government to the highway users, who will continue to pay tolls beyond the original concession expiry dates. For instance, while the government saves an estimated RM4.3 billion by not having to compensate toll concessionaires for abstaining from toll hikes, this saving is offset by the prolonged toll collection by ALR.
Government Fiscal Savings vs. Public Burden

The government's projected savings of RM4.3 billion stem from its decision to no longer provide compensation to toll concessionaires for freezing toll rate increases. This fiscal relief allows the government to reallocate these funds, potentially towards public welfare and infrastructure development programmes as suggested by Fadillah. However, this financial manoeuvre shifts the burden of highway ownership and debt servicing onto the public through continued toll payments. While the absence of toll hikes is presented as a benefit, experts suggest that a more advantageous outcome for the public would be the complete cessation of tolls upon concession expiry or at least a significant reduction in rates.
Equity Valuation and Potential Overpricing Concerns

The ultimate financial impact on highway users is also contingent on the equity valuation of the acquired highways and the fairness of the terms. Reports indicate that while the average valuation for the four highways appears reasonable at 1.8 times their book value, specific assets like the Sprint highway have raised concerns, with an analyst pointing to a price-to-book value ratio of 3.2. If the valuations are inflated, it could lead to longer repayment periods for the Sukuk bonds, thereby prolonging the period during which highway users are required to pay tolls, further exacerbating the financial burden on the public.
Transparency and Governance in ALR Operations

As ALR is structured as a non-profit entity, its objective is to repay the Sukuk bonds and return the highways to the government as swiftly as possible. However, concerns have been raised regarding the transparency of ALR's operations and governance. To ensure that the public's extended toll payments are managed efficiently and do not become an undue burden, stringent financial measures and oversight are crucial. This includes scrutinising remuneration packages and ensuring that ALR's management and contracting processes adhere to strict governance standards to minimise overheads and accelerate debt repayment, thereby shortening the concession periods.

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Are highway users paying for the RM4.3 billion government savings?

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