Sunday, October 18, 2009

New approach to lower toll rates

KUALA LUMPUR: Asas Serba Sdn Bhd will use a new business model to run highways
that can alleviate the need for government subsidies.

Datuk Syed Md Amin Aljeffri, one of the company directors, said under the business model, Asas Serba would gain from the economies of scale.

“It is all about controlling costs. If you buy anything in bulk, it is always cheaper. This applies to highway concessions as well,” he said.

Secondly, the new company will cut down on wastage.

“I don’t think I have to say it but I think there are a lot of improvements that can be made in this area,” he told the New Sunday Times.

He said Asas Serba had engaged RAM Consultancy Services Sdn Bhd to calculate the costs.

“We have gone through the numbers. We are confident that we can reduce toll rates by 20 per cent. This translates into rates that are lower than what was paid in 2002.” For example, he said the toll rate for highways managed by PLUS Expressways Bhd, the biggest concessionaire which runs the North-South Ex - pressway, would go down to 11.97 sen/km. This is lower than the rate of 12.36 sen/km in 2002.

“With no increase, this new rate, after taking inflation into account, will only be 7.7 sen/km in present value terms at the end of 10 years.” Malaysians have had to deal with spiralling toll rates over the years. Toll payments and transportation costs take up a big chunk of disposable income and are burdening intra-urban motorists.

The government has been looking at ways to bring down the toll rates, but under existing contracts with concessionaires, toll rates can be increased every few years.

Lebuhraya Damansara-Puchong (LDP), for example, is due to raise its rate in 2011 from RM1.60 to RM2.10 at each toll.

It is estimated that the government will have to cough up RM114 billion in compensation if it wants to prevent toll hikes until 2038.

Syed Md Amin said his company had better financial models to manage the highways.

“We have different models for different scenarios. We are putting up a scheme that we think is workable. The way they sign the highway concessions has room for improvement.” He said the government had paid out substantial amounts in subsidies.

He said based on information available from PLUS Bhd’s financial accounts for the last four years, the company had been making profits from government compensation.

“There is still room to make money without gover nment compensation,” said Syed Md Amin, who is also president of the Kuala Lumpur Malay Chamber of Commerce.

Other Asas Serba directors are Ibrahim Bidin, president and CEO of Pinelabs (M) Sdn Bhd and former PLUS Expressways Bhd chief operating officer; Wan Kamaruddin Wan Mohamed Ali, former director of Babcock & Brown and Fieldstone International; and Syed Budriz Putra, CEO of Sepang Aircraft Engineering Sdn Bhd.

*Taken from NST Online

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kenwooi said...

if im not wrong.. i think last time they said wanna remove the toll fee.. but now also still need to pay.. lol =P

wan hafiz said...

kenwooi: imho, the realistic they can offer is lower toll rates. which i hope can be materialized sooner rather than later

btw, there's no free things in the world :P