2015-npe-pantai-dalam-toll-plaza- 001

More on the recent toll hikes, this time from the highway concessionaires themselves. According to a The Star report, the hikes are deemed as necessary by toll concessionaires as they needed to meet shareholder returns and to service debts.

Some highways are said to have been incurring losses despite having been in operation for over a decade. Such is the case for the Sprint Expressway, according to Lingkaran Trans Kota Holdings Berhad (LITRAK) COO, Richard Lim. Although it has been in operation for 14 years now, it only started making a profit this year, and losses incurred throughout those years amount to RM440 million.

Lim said that the Sprint Expressway costs RM40 million to operate, with a big chunk of it going into financing expenses. He added that since the highway started, none of the investors had received any returns. “Being a public-listed group, the shareholders expect a reasonable rate of return on their investments,” Lim said.

Karak-highway

He noted that rates would usually start low and gradually increase to make up for depreciation. While he acknowledged that a single toll rate could be used over 36 years, it would have to start at a higher rate. “For example, RM2.50 instead of RM1,” the COO said.

As for Ekovest Berhad, concessionaire for the Duta-Ulu Klang Expressway (DUKE), its managing director Datuk Lim Keng Cheng said a gradual increase of rates is necessary. The reason behind this is due to the financing of the project – structured in a way where the toll revenue collected has to match the maturity of debt instruments.

“Without a toll rate increase, this may impact the toll concessionaires’ short-term cash flows. As such, this could affect their ability to service their debt obligations as well as to maintain certain required debt service coverage ratios in order to maintain the ratings of their debt issuances,” he added. Since it started in 2009, the DUKE highway has a cumulative net loss of 190 million.