Even though the government is open to all proposals from the private sector for the purchase of PLUS Malaysia, finance minister Lim Guan Eng has said that the government is also considering the possibility of taking over the company itself.

“We have the magic bullet; we are able to borrow at very low rates — that is what we want to take advantage of,” said Guan Eng in an interview with The Edge.

Currently, ownership of PLUS Malaysia is split between Khazanah Nasional, which controls a 51% stake through UEM Group, and the Employees Provident Fund (EPF) with 49%.

According to Guan Eng, the former has submitted a proposal to sell PLUS to the government, as it is concerned about the diminishing of assets by selling the company to private parties.

He noted that any proposed acquistion of Malaysia’s largest toll concessionaire must have no impact on the government’s debt service charge, entail any compensation on freezing toll hikes and provide substantial savings for road users.

“We (the government) reject the policy of socialisation of losses and privatisation of profit. I want to see whether we can be part of this change. Of course in the process I could be ‘chopped’ because I am fighting with big interests,” said Guan Eng. Additionally, he said offer to buy out PLUS must be at a price that both stakeholders can agree upon.

Guan Eng explained should PLUS’ toll assets be sold below cost, the government would be criticised and accused of directing Khazanah and EPF to sell, which will result in both being percevied as not acting independently. “And [in that case], again people will accuse us of cronyism. In addition, the bondholders will downgrade [the debt papers],” he said.

Up until now, there have been three proposals from the private sector to acquire PLUS, with one of them from Maju Holdings. The company is bidding to purchase PLUS at an enterprise value of RM34.9 billion, which includes outstanding debt.

Meanwhile, Malaysian-led, Hong Kong-based private equity firm RRJ Capital is offering RM3.5 billion, and is willing to form a 50:50 partnership with government institutional funds or private companies to own and manage PLUS.

The most recent offer comes from Widad Business Group, with the company offering RM1.5 billion to take over Khazanah’s 51% stake, or RM3 billion for 100% ownership. All three include toll reductions with the conditions of an extension of the concession period plus government guarantees of debt papers.

Guan Eng said the government needs time to evaluate the proposals from the private sector that involve government-guaranteed debt papers. “The government will be responsible if there is any loss [given that the government guarantees the bond papers after takeovers by the private sector]. Be patient and wait for announcements,” he noted.

The minister also said abolishing tolls – as stated in Pakatan Harapan’s GE14 manifesto – isn’t an easy feat, and would be done in stages. “At least we are keeping the first step — the first stage of the promise by making the reduction [in tolls],” he said, citing the recent Budget 2020 tabling.

Last Friday, Guan Eng said PLUS Malaysia will offer a minimum reduction of average toll charges by 18% discount for all its highways from 2020. The move would save highway users up to RM1.13 billion in 2020, and RM43 billion over the entire concession period until 2038.

“It will cost the government RM303 billion to take over all toll concessions in the country. If the government has half of the amount, we could gear up to raise the remaining sum,” Guan Eng said.