Experts say the decision lies with all shareholders in the highway companies.
PETALING JAYA: Experts have poured cold water on the Selangor government’s plans to reject the impending toll hike, pointing out that the final decision would lie with all shareholders in the highway companies.
“As minority shareholders, the Selangor government can object to the toll hike, but ultimately the decision would be put to a vote, and it may even be rejected,” Yeah Kim Leng, group chief economist of RAM Holdings, told FMT.
“So they actually have no ultimate power. They can only exercise their rights as a shareholder, and will have to go through due process by tabling their objection at the shareholder’s meeting.”
Subramaniam Pillay, an economist and associate professor at Taylor’s university, concurred with this, saying that “normally, the majority shareholder makes the final decision.”
But he added that the concession agreements might have allowed for an exception to allow minority stakeholders to make decisions.
Last week, Selangor economic advisor Anwar Ibrahim announced that the state government, through the Selangor State Development Corporation (PKNS) and Kumpulan Perangsang, would oppose the toll hike. PKNS owns 30% of the Kesas highway and Kumpulan Perangsang owns 20% in Sprint and Lebuhraya Damansara-Puchong (LDP)
Anwar said the state would use its stake in the highway companies to protect the people’s interest and rejected statements by Barisan Nasional leaders that the hike could not be avoided as it was provided for in the concession agreements.
“I understand that the issue will be brought to the state exco meeting today and orders will be given out to government representatives in the highway consortium involved to reject the toll hike,” Anwar told a press conference on Dec 18.
“They have a right to object as minority shareholders.”
Yeah said that while Selangor’s planned action would not necessarily result in Kesas, Sprint and LDP maintaining current toll rates, Anwar was right in saying that the government could avoid implementing the toll hikes.
He said the government, even if it could not order the toll concessionaires to delay or cancel the hikes, could exert influence on government-linked companies that had shares in the firms.
PKR’s Rafizi Ramli disclosed last week that the North-South Expressway Project is wholly-owned by government funds such as Khazanah Nasional Bhd and the Employees’ Provident Fund (EPF).
The second largest operator, Projek Lintasan Kota Holdings Sdn Bhd (Prolintas), is wholly owned by Putrajaya’s fund manager Permodalan Nasional Bhd. Prolintas operates the Ampang-Kuala Lumpur Elevated Highway and Guthrie Corridor Expressway.
Gamuda Bhd, which operates the Damansara-Puchong Expresswayand the Sprint Highway, is the only privately-owned highway firm, but 22.59% of its shares are held by EPF, Tabung Haji and other government funds.
“The government can influence the GLCs which own shares in highway companies to vote for a delay in the toll hike,” Yeah said. “It can even persuade the GLCs to not demand compensation for the delay.”
He added the delay should be applied to highway tolls that were already congested and generating profit.
“If the toll revenue is not sufficient to cover costs, then the toll concessionaires may have a case and the burden should be shared with the road users.
“But the government can practice its discretion and influence when it comes to those highways that are already generating profit.”
But Yeah said the toll hike should not reach 100% as such a move would be hard to justify given that inflation is currently around 2%.
PETALING JAYA: Experts have poured cold water on the Selangor government’s plans to reject the impending toll hike, pointing out that the final decision would lie with all shareholders in the highway companies.“As minority shareholders, the Selangor government can object to the toll hike, but ultimately the decision would be put to a vote, and it may even be rejected,” Yeah Kim Leng, group chief economist of RAM Holdings, told FMT.
“So they actually have no ultimate power. They can only exercise their rights as a shareholder, and will have to go through due process by tabling their objection at the shareholder’s meeting.”
Subramaniam Pillay, an economist and associate professor at Taylor’s university, concurred with this, saying that “normally, the majority shareholder makes the final decision.”
But he added that the concession agreements might have allowed for an exception to allow minority stakeholders to make decisions.
Last week, Selangor economic advisor Anwar Ibrahim announced that the state government, through the Selangor State Development Corporation (PKNS) and Kumpulan Perangsang, would oppose the toll hike. PKNS owns 30% of the Kesas highway and Kumpulan Perangsang owns 20% in Sprint and Lebuhraya Damansara-Puchong (LDP)
Anwar said the state would use its stake in the highway companies to protect the people’s interest and rejected statements by Barisan Nasional leaders that the hike could not be avoided as it was provided for in the concession agreements.
“I understand that the issue will be brought to the state exco meeting today and orders will be given out to government representatives in the highway consortium involved to reject the toll hike,” Anwar told a press conference on Dec 18.
“They have a right to object as minority shareholders.”
Yeah said that while Selangor’s planned action would not necessarily result in Kesas, Sprint and LDP maintaining current toll rates, Anwar was right in saying that the government could avoid implementing the toll hikes.
He said the government, even if it could not order the toll concessionaires to delay or cancel the hikes, could exert influence on government-linked companies that had shares in the firms.
PKR’s Rafizi Ramli disclosed last week that the North-South Expressway Project is wholly-owned by government funds such as Khazanah Nasional Bhd and the Employees’ Provident Fund (EPF).
The second largest operator, Projek Lintasan Kota Holdings Sdn Bhd (Prolintas), is wholly owned by Putrajaya’s fund manager Permodalan Nasional Bhd. Prolintas operates the Ampang-Kuala Lumpur Elevated Highway and Guthrie Corridor Expressway.
Gamuda Bhd, which operates the Damansara-Puchong Expresswayand the Sprint Highway, is the only privately-owned highway firm, but 22.59% of its shares are held by EPF, Tabung Haji and other government funds.
“The government can influence the GLCs which own shares in highway companies to vote for a delay in the toll hike,” Yeah said. “It can even persuade the GLCs to not demand compensation for the delay.”
He added the delay should be applied to highway tolls that were already congested and generating profit.
“If the toll revenue is not sufficient to cover costs, then the toll concessionaires may have a case and the burden should be shared with the road users.
“But the government can practice its discretion and influence when it comes to those highways that are already generating profit.”
But Yeah said the toll hike should not reach 100% as such a move would be hard to justify given that inflation is currently around 2%.
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