Renegotiating “sacred contracts”

By Deborah Loh (The Nut Graph)

WHEN toll concession agreements were declassified in January 2009, it was a milestone for the nation because for the first time ever, these contracts could be scrutinised.

To the credit of the DAP, its politicians spent hours copying the agreement by hand at the Works Ministry because the government would not allow any copying or recording of the documents.

While the declassification indicates some movement towards transparency, what was even more revealing was that the agreements themselves show that no contract is so sacred it cannot be reviewed. At a time when taxpayers are being told that the government must honour the contracts it has signed with the concessionaires for roads, water and power, the DAP politicians' findings are not only significant. They could help save taxpayers' money.  

Not sacred

The LDP (© Azreey / Wiki Commons)

In 2007, politicians from the DAP and Parti Keadilan Rakyat obtained a copy of the Lingkaran Trans Kota Sdn Bhd (Litrak) 1996 concession agreement for the Damansara-Puchong Expressway (LDP) and revealed its contents to the public.

The details showed that the government guaranteed fixed toll hikes at certain intervals over the concession period, regardless of profits made. This was despite Litrak having already recovered its building costs for the expressway within a few years after the LDP was operable.

The government's reaction was to threaten legal action against the politicians for breaching the Official Secrets Act (OSA) 1972. But shortly after, it began to acknowledge the need to declassify such agreements to prevent negative public perception.

Now, scrutiny of the declassified agreements has revealed that it is possible for the government to buy back the highways under an expropriation clause in several of the agreements.

"The government has always hidden behind the principle of the sanctity of contracts when not wanting to review toll agreements. But after looking at the declassified documents, we found that quite a number of them had expropriating (buy back) clauses," Teh Chi Chang tells The Nut Graph.

Teh says renegotiating toll agreements would not violate the contract because the clause was already in the agreement. "It was just a matter of exercising the clause," the economic adviser to the DAP secretary-general and member of the DAP's Operation Restore (Restructure Toll Rates and Equity) team says.

The question is whether the government has the political will to do so, and if not, why?

Read more at: http://www.thenutgraph.com/renegotiating-sacred-contracts