In its GE14 manifesto, the ruling government Pakatan Harapan promised a gradual abolishment of tolls over the next five years. According to the New Straits Times, privatisation seems like a probable outcome for listed toll operators, but only if the government decides to completely abolish tolls.

If carried out, the privatisation deal will be one of the country’s largest corporate exercises, costing billions of ringgit covering assets and liabilities. MIDF (Malaysian Industrial Development Finance) Research head Redza Rahman said the listed toll operators whose business was only involved in managing toll operations, may be taken private after the government took over their debt obligations and paid the necessary compensation.

“For listed companies whose sole business is largely on toll concessions, it looks like a privatisation exercise would be best. But for others, where concession is one of their business segments, I reckon the other segments would be around to contribute to the companies,” he told NST Business.

In 2011, the former Barisan Nasional government privatised Plus Highways for RM23 billion, and it apparently rationalised toll collection and prevented unnecessary hikes in toll charges.

Redza said privatisation requires heavy funding, including the penalty for early debt retirement unless the government can negotiate for roll-over of these debts onto new debts to be issued by the government. Apparently, the government needs to fork out RM55 billion to take over all the toll operators’ debt obligations, and this excludes compensation.

Listed toll concessionaire companies include IJM Corp, WCE Holdings, Taliworks Corp, Ahmad Zaki Resources, Gamuda, Bina Puri Holdings, Ekovest, Lingkaran Trans Kota Holdings (Litrak, largely owned by Gamuda) and Malaysian Resources Corp. Litrak is the only listed company that generates revenue from toll collection.

Stock market analyst Nazarry Rosli said the decision to abolish toll will likely lead to privatisation through government takeover. He said the government will need to assess the value of all these toll operators before making a decision for acquisition. “Once decided, then the challenge would be getting at the acquisition price that will be accepted by all these toll operators’ shareholders,” he said.

As of now, uncertainty lingers among toll operators, because the government has yet to make any decision on whether to remove toll entirely or in stages. However, Council of Eminent Persons, Tun Daim Zainuddin said in a report by The Edge that shareholders of toll concessionaires have “plenty of cash” to cushion the impact from a reduction or elimination of tolls.