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Extension of PLUS Concession to Year 2058: Doing the Maths

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I don’t use PLUS highways on daily basis but when it comes to taking week long drive to the in-laws house or going for holidays, we have no choice but to use PLUS highways for the trip up North or South (rarely we go off to the East Coast unless there are very important family functions or to do crazy thing like this trip). Image source: Compare

Read these highway related posts:-

When Pakatan Harapan came into power back in 2018, their election manifesto mentioned this on the highways in the country:-

The Pakatan Harapan Government will review all highway concession agreements. We will renegotiate to obtain the best value for money for the people so that we can take over the concessions with the ultimate view of abolishing tolls gradually. We believe that infrastructure like roads and highways are the responsibility of the government for the people.

To be frank, any total abolishment of the toll would mean the operating (like PLUS Ronda services) & maintenance cost would have to come out from the Government’s pockets. Otherwise PLUS highways like the 772 kilometres North South Expressway will end up in disrepair. So some form of minimal collection may need to be maintained so that the highways are kept at tip top conditions without burdening the Government (which in the end, burdens the taxpayers money).

But there had been some consideration to sell off PLUS to private entities – as to why they want to do this however remains unclear. Why anyone wants to sell off a profit making entity? Obviously whoever offering to take over PLUS with promise to reduce toll rates will still make money at the end. Even the public investment arm, Khazanah who holds 51% of PLUS knows this well and is not keen on selling off PLUS to private entities:-

During an interview recently, Shahril said Khazanah had so far rejected all takeover offers it received from local and foreign private entities for the country’s largest highway operator.

“There are many offers from different parties… but our reply to all of them is very simple – we are not interested in selling,” he said in an interview with TV3, aired on Saturday night.

Khazanah owns 51 per cent of PLUS, while the Employees Provident Fund own 49 per cent, following a takeover exercise in 2011, in a transaction valued at RM32 billion.

Shahril added that as an investment arm of the government, Khazanah must ensure that strategic assets such as PLUS were not sold to parties whose only interest were in making profits, without considering the needs of the people.

“If PLUS is making profits, it goes back to the government through Khazanah, or to Malaysians via the EPF,” he added.


After get negative comments from the various quarters except maybe the bidders, Pakatan Harapan Government decided not to sell off PLUS but with some conditions:-

The government today announced that all private vehicles using highways operated by PLUS Malaysia will be paying reduced toll charges as early as next month.

The highways include the North-South Expressway, NKVE, ELITE, Linkedua, LPT2, Seremban-Port Dickson Highway (SPDH), Butterworth-Kulim Expressway (BKE) and the Penang Bridge.
It said the move would see the toll rate for the North-South Expressway reducing from 13.6 sen to 11.15 sen per km.

“Upon its implementation, the new toll rate will be lower than the toll rate in 1999 (11.24 sen/km),” said a statement by the Prime Minister’s Office.

In return, the government agreed to extend PLUS concession period to another 20 years, from 2038 to 2058.

“This is to ensure PLUS can carry out the maintenance and operations of its highways without depending on the government,” it said.

The government said throughout this 38-year period, there would not be any toll increase.

It further said that the decision would not affect the government financially as it would no longer be required to compensate PLUS.

The previous concession contract provides for a gradual increase in toll charges on PLUS highways.

The new rates represent an 18% drop on toll rates for all private vehicles at all PLUS highways starting from Feb 1.

Putrajaya said the move would result in an estimated RM42 billion in savings for the government throughout the concession period.


It seems like it is a good deal even though the toll concession period had been extended by another 20 years – firstly the rate goes down and will remains unchanged for the next 38 years and secondly (and more importantly) the Government does not need to pay any compensation for the next 38 years. That is a big saving of RM42 billion. And all profits earned by PLUS go back to the Government one way or another.

But let’s do some maths if this is a feasible proposal?

Let’s make assumption – let’s just take 20% of the NSE length of 772 kilometres (let’s disregard other highways under PLUS first) and take 20% of the actual 1.5 million cars uses the PLUS highways the whole day.

If the Government had just let the toll concession period remained unchanged (ending on year 2038) with no charge of the toll rate of 13.8 cents per kilometres, PLUS would have expected to get about RM41 billion for the remaining 18 years. Mind you, it is RM41 billion from the public road users.

A total revenue of RM41 billion for 18 years is about RM2.2 billion for a year (it was reported that the free cashflow was in excess of RM1.9bil in the first nine months of 2018 – source).

But with the new proposal of extending the toll concession period to 2058 and reduction of the toll rate to 11.15 cents per kilometres, PLUS would have expected to get about RM72 billion for the remaining 38 years. An increase of RM30 billion collected from the public.

RM72 billion for 38 years however will see a lower collection of about RM1.9 billion for a year. Obviously the actual revenue would be higher (in 2016 alone, it was RM4 billion).

And mind you, PLUS also still have a huge debt that needs to be settled (this was as at April 2019):-

A document sighted by The Malaysian Reserve (TMR) showed that PLUS has redeemed about RM400 million to date of the RM30.6 billion sukuk, leaving the country’s largest toll operator with RM30.2 billion of debt after the 2011 delisting exercise.

As at Dec 31, 2016, PLUS’ total assets were at RM33.22 billion and total liabilities at RM33 billion. For its financial year ended December 2016 (FY16), the group registered a profit after tax of RM288.2 million and RM4.07 billion in revenue.

Earlier in the Dewan Rakyat, Mohd Anuar said a sizeable portion from PLUS’ toll collection is channelled to redeem the RM30.6 billion sukuk, the largest global sukuk and Malaysia’s single largest bond issuance at that time.


If PLUS wants to settle the debt of RM30.6 billion and without any funds from the Government that money needs to come from the toll collection. It only makes sense since if the toll rate is reduced to 11.15 cents per kilometres and there is no extension given, PLUS stands to lose about RM10 billions in revenue.

So, something else needs to be compromised. So this extension of the toll concession period is necessary for Khazanah to make enough to pay off the debts and have enough for operating & maintenance expenses.

But the other hand, despite the lower toll rate of 11.15 cents per kilometres, the public will see longer toll collection which prolongs collection from them for another 20 years. For those who regularly uses PLUS tolls, this is certainly not good news.

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