Putrajaya should allow a hike in the Express Rail Link (ERL) fees instead of 'bailing out' the concessionaire with a 30-year extension of its contract, said DAP lawmaker Tony Pua.

In a statement today, the Petaling Jaya Utara MP questioned the rationale behind the contract extension and described it as "ERL's bluff".

"On Wednesday, Deputy Transport Minister Ab Aziz Kaprawi told Parliament that the government was extending the concession period for ERL by 30 years.

"He stated that the concession extension is the government's compensation to ERL for rejecting its last three scheduled fare hikes," Pua said.

The ERL's contract is held by Express Rail Link Sdn Bhd (ERLSB) and was inked in 1997. ERL is entitled to a fare review every five years.

"The ERL Express service is currently priced at RM55 but should be priced at RM74 according to its initial concession agreement.

"It is meant to increase again in 2019, to RM97 and another increase is due in 2024, bringing the fare up to an astonishing RM126," said Pua.

Pua added that ERL had previously demanded RM2.9 billion in compensation from the government due to its inability to raise fares based on its initial schedule.

He noted that the Auditor-General’s report had found that ERL’s revenue was between 11.5 percent and 13.7 percent of its projected revenues.

"Hence, why should tax-payers compensate ERL for revenues which were outrageously inflated anyway?" he questioned.

"On the contrary, instead of trying to stop the fare hikes, we call upon the government to 'approve' the fare hike, per the concession agreement, should ERL chooses to implement them.

"This is because should ERL chooses to hike the fares further, their ridership will fall even further than its already low levels today," he explained.

Citing Ab Aziz's remark that ERL's ridership had dropped 19 percent to 8.9 million in 2016, after its fare increased from RM35 to RM55, Pua added that a further increase would cause the number of riders to drop even more.

"By Ab Aziz's own admission, ERL had suffered six continuous years of post-tax losses from 2009 to 2014.

"The reason is simple, there’s now ample competition in transport service available to both KLIA and KLIA2. The same journey using GrabCar or Uber ride service will cost RM65, and approximately RM75, respectively. If the rides are shared, then the fares are significantly cheaper than ERL," he elaborated.

"Hence, the government should call ERL’s bluff and allow them to proceed to raise its fares. If ERL does so, and collapses financially due to the lack of passengers, the government has the right under the concession agreement to take back its service," he added.

If ERL chooses not to hike its fares despite being allowed to do so by the government, he said, then taxpayers will be absolved of any obligations to compensate ERL.

"The question for the government is, is its rejection of fare hikes an honest attempt to protect the rakyat, or is it really a masked attempt to bail out ERL and save a crony-linked company?

"The ERL concession was awarded in 1999 through a direct negotiation with the ERLSB, whose largest shareholder is the YTL Group. By choosing to extend ERLSB concession, the government is helping ensure that those lopsided terms continue," he said.