Subsequent to my speech in parliament on 26 February 2009 and presentation to the MCA Presidential Council on 3 March 2009 on the proposal to acquire PLUS, I had a chance to present the proposal to Tan Sri Nor Mohamed Yakcop (head of EPU) on the benefits of the acquisition of PLUS on 09 June 2009.
The presentation was done together with the team that was tasked to put forward the proposal to EPU to look at the benefits of acquiring PLUS.
In summary, the presentation lasted for approximately 45 minutes including discussion and I am pleased that the Government is taking steps to reach out to gain more feedback and different viewpoint on the issue.
As I have stress previously, acquiring PLUS would be beneficial as it could used as a benchmark and guideline to see if the take over could be done for the benefit of the rakyat, at the same time not straining the government financial position. The remaining free float shares of PLUS should be acquired as I have previously proposed at RM3.50 considering that the price of the share has now moved up. Assuming Government would like to have full control of PLUS it would require an outlay of approximately RM6.32billion.
Seem a lot in the short term but in the long run the Government would also stand to benefits. The following is a summary of benefits that I have previously mentioned;
a) Good returns
The presentation was done together with the team that was tasked to put forward the proposal to EPU to look at the benefits of acquiring PLUS.
In summary, the presentation lasted for approximately 45 minutes including discussion and I am pleased that the Government is taking steps to reach out to gain more feedback and different viewpoint on the issue.
As I have stress previously, acquiring PLUS would be beneficial as it could used as a benchmark and guideline to see if the take over could be done for the benefit of the rakyat, at the same time not straining the government financial position. The remaining free float shares of PLUS should be acquired as I have previously proposed at RM3.50 considering that the price of the share has now moved up. Assuming Government would like to have full control of PLUS it would require an outlay of approximately RM6.32billion.
Seem a lot in the short term but in the long run the Government would also stand to benefits. The following is a summary of benefits that I have previously mentioned;
a) Good returns
- The accumulated profit after tax from financial year end 2004 to 2008 is RM5.265billion and RM2.706billion if toll compensations are excluded.
- Good profit margin after tax ranging from 16% and above.
b) Avoid toll hike
- The concession agreement was signed in 1988 and is for 50 years thus ending in 2038 unless there are extensions.
- Good profit margin after tax ranging from 16% and above.
b) Avoid toll hike
- The concession agreement was signed in 1988 and is for 50 years thus ending in 2038 unless there are extensions.
- Currently the Government is bound contractually to allow the toll increase. From the financial aspect, PLUS have been generating a profit of RM350million to RM600million yearly from the financial year 2004 to 2008, even if the gross compensation from the Government for not increasing the toll is excluded.
- This clearly shows that if PLUS is taken over and held by the Government the possibility of waiving toll increase can be carried out both financially or legally
c) Costly toll compensation
- Current the Government has been compensating PLUS yearly and the amount has been increasing yearly from RM295million in 2003 to RM730million in 2008.
- Acquiring PLUS would enable the Government to reduce or avoid toll compensation.
d) Reduction of toll
- As at 31/12/08 the long term borrowings of PLUS amounts to RM9.4billion and if the yearly dividend announced and received is assumed to RM800million PLUS can settle the long term borrowing in 12 years MAXIMUM based on the financial results as at 31 December 2008.
- With the reduction in borrowings the cash flow savings and expenses is estimated to be RM645million yearly based on 2008 financial figures. This would reduce the cost of operations of PLUS and hence a reduction of toll fee is possible.
In conclusion, there are benefits in exploring this proposal and I hope that the Government would acquire the remaining shares in PLUS to ensure that the rakyat are not burdened due to 3 yearly adjustment of toll rate. The current three years toll hike issue needs to be addressed as any increases in toll should be based on operational needs rather than contractual obligations. Politically, it would signify a significant change in the Government and shows that the Government cares and listen to the rakyat.
c) Costly toll compensation
- Current the Government has been compensating PLUS yearly and the amount has been increasing yearly from RM295million in 2003 to RM730million in 2008.
- Acquiring PLUS would enable the Government to reduce or avoid toll compensation.
d) Reduction of toll
- As at 31/12/08 the long term borrowings of PLUS amounts to RM9.4billion and if the yearly dividend announced and received is assumed to RM800million PLUS can settle the long term borrowing in 12 years MAXIMUM based on the financial results as at 31 December 2008.
- With the reduction in borrowings the cash flow savings and expenses is estimated to be RM645million yearly based on 2008 financial figures. This would reduce the cost of operations of PLUS and hence a reduction of toll fee is possible.
In conclusion, there are benefits in exploring this proposal and I hope that the Government would acquire the remaining shares in PLUS to ensure that the rakyat are not burdened due to 3 yearly adjustment of toll rate. The current three years toll hike issue needs to be addressed as any increases in toll should be based on operational needs rather than contractual obligations. Politically, it would signify a significant change in the Government and shows that the Government cares and listen to the rakyat.
YB, keep it up!
ReplyDeleteYB, great to see that there is a progress for this proposal. We should let more people know that we, MCA, did do the job for people. Keep up the good job YB. You are the hope for MCA.
ReplyDelete