Instead of paying highway concessionaires compensation to keep toll rates down, the government should instead be considering buying over certain companies.

Commenting on the controversial toll hikes announced this week, Kulai MP Teo Nie Ching said for example a hike could be avoided on the 11.5km Cheras-Kajang Highway.

“Instead of allowing the toll hike, our government should just acquire Cerah Sama Sdn Bhd, which owns Grand Saga Sdn Bhd, the concession holder,” said Teo in a statement.

As the government already has a 49 percent stake in the company, she said, it should simply buy the remaining 51 percent at roughly RM120 million.

“RM120 million is not a small sum. But it is nothing if compare to the compensation paid by the BN government to the concessionaire,” she said.

This week following outcry over the toll hikes announcement, the government explained it could not be averted as the cost of compensating concessionaires in lieu of the hikes was not financially viable.

Cheaper in long run

Teo said the Employees Provident Fund (EPF) already acquired from Taliworks Corp Bhd a 31.85 percent indirect stake in Cerah Sama Sdn Bhd for RM68.68 million cash last year.

With the divestment of South East Asian Strategic Assets Fund LP’s (SEASAF) 35 percent equity interest in Cerah Sama, she said, EPF now effectively controls 49 percent.

In contrast to the cost of purchasing the remaining stakes at RM120 million, said Teo, as at 2012, the government has paid Grand Saga RM284.5 million as compensation for not raising tolls.

“As such, it is definitely better and wiser for the government to acquire Cerah Sama Sdn Bhd, the investment holding company of Grand Saga, especially since the concession agreement will only expire in 2045.

“Cerah Sama recorded a net profit of RM18.3 million for the financial year ended Dec 31, 2013.

“So, why opt to pay compensation when we can acquire the highway by a smaller sum, especially when BN government will be able to recover the money by continue to collect toll for a few more years?

“And once BN government has recovered its costs to acquire the Cheras-Kajang Highway, road users will be to use the road for free!” said Teo.