Multi-lane free flow project hits barrier as highway companies protest

Concessionaires cry foul over award of RM3.46 billion toll conversion scheme to an ‘inexperienced’ private company.

(FMT) – Thirty-two highway toll concessionaires have protested against the government’s move to directly award a private company the multi-lane free flow (MLFF) project for all highways in the country.

Under the MLFF system, all exit and entry points on the highways will be converted into barrier-free lanes to reduce congestion and ease traffic flow.

According to sources in the know, the government signed an “appointment agreement” with a YTL Corporation Bhd-linked company on Nov 17, awarding the RM3.46 billion project without consulting the concessionaires who will eventually foot the bill.

FMT is attempting to reach YTL Corporation for comment.

The association is reportedly seeking legal advice on the matter, as the government is offering a 20-year concession to KJS-SEP Synergy (M) Sdn Bhd.

PSKLM says it is against the existing agreements to offer a concession to a third party over their existing concessions.

“The ministry is putting up another paper any time soon to conclude the appointment without consent from the concessionaires. Neither were they given any details on the terms of the appointment.

“In the absence of those details, it is unfair for the government to do this without our consent as parties with live contracts,” one source told FMT.

Another source said the association had sent an official letter signed by all 18 companies representing the concessionaires, with an executive summary of how its new award would work against them and the government.

Major monopoly in the making

Among the main concerns conveyed to the government is the estimated cost of RM3.46 billion, which PSKLM says can be cut by 30% if the individual companies are allowed to build and implement the MLFF system by themselves.

“The award smacks of a major monopoly, where the total toll revenue annually is about RM6 billion. After the implementation, the company will recover its implementation cost with an annual payment of between RM650 million and RM800 million by concessionaires.

“Besides this, the toll industry questions the rationale of such a direct award, as the company in question has no experience in the industry. The cost competition is also questionable as there has been no cost-benefit analysis,” the source said.

Worse still, the source added, current toll operations and their validation process by concession companies will be taken over by KJS-SEP, raising potential integrity issues in respect of traffic and toll revenue, in view of the end-to-end process being controlled by a single company without any checks and balances.

Surge in revenue leakage under MLFF

PSKLM said there would be a huge increase in toll violators like non-paying motorists, and issues such as illegal and unregulated car plate numbers and tailgating, which would impact toll revenue.

It said the concessionaires, not the new company, would be bogged down with tracking the offenders to recoup their losses.

“All this will result in a loss of toll revenue and impair concession companies’ ability to service their debts,” the source said.

The association urged the government not to proceed with the award as the implications to the current concessionaires would be serious.

FMT has reached out to PSKLM for comment.