UEM-EPF in the driver’s seat for PLUS

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Latest: PLUS has accepted the UEM-EPF bid as a confirmed offer. MMC meanwhile had submitted its bid directly to the government.

See Singapore Business Times story here.

While we are all distracted by the ethnic and religious controversies in the country, watch out for these big-ticket deals.

On the sale of PLUS Expressways Bhd, one of the most lucrative assets in the country: UEM-EPF remains the only bidder (RM23 billion) after Jelas Ulung, which had submitted a RM26 billion bid, dropped out of the race when it failed to come up with a RM50 million deposit.

And in response to a Star article, ‘MMC to bid for Plus’, MMC (Yes, Syed Mokhtar Al-Bukhary’s MMC again) wrote to Bursa on 10 January that it had “not received any indication from the Government on our proposal to acquire PLUS Expressways Berhad via the acquisition of UEM Group Berhad. We will make the relevant announcement to Bursa Malaysia as and when there is a material development in relation to this proposal.”

I think it is important for the North-South Highway to remain in government hands not only to avoid ‘compensation’ payments in lieu of tariff increases but also to allow the government to use the profits from the highway to cross-subsidise public transport in the country and especially to finance improvements in inter-city rail transport. If the government holds on to the North-South Highway it could use the toll rates as a price mechanism to regulate traffic on the highway and divert commuters to trains, assuming the service is upgraded.

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At present, PLUS is owned by Khazanah (55 per cent including indirect interest held via UEM Group Bhd) and EPF (12 per cent).

Meanwhile, Wong Chun Wai writing in The Star said:

re-look an existing agreement between PLUS and Propel Bhd, which maintains the highways at a cost of between RM400mil and RM500mil.

It may not be a household name but Propel, or Project Penyelengaraan Lebuhraya Bhd, is the largest highway maintenance company in Malaysia. It undertakes repair and maintenance works along the highways, earning a profit of RM60mil from the contract. Along the way – or highway, if you like – sub-contractors, some with political connections, also acquire millions from this arrangement, it is believed.

There has to be a better way to make things right. That would include unwinding the agreement between PLUS and Propel, so that the former gets to keep the profit. MMC is attempting to convince its powerful listeners that it will cover the shortfall in future revenue.

We need to ask whether there has been enough cost-savings exercises to reduce duplication and wastage in operating the highway.

Then there is the Klang River clean-up job, which The Edge reported is worth RM8 billion. The weekly had reported that MRCB and Ekovest were on the verge of landing the job.

But Ekovest told Bursa on 10 January: “As of today, we have not received any Award Letter from the Government of Malaysia pertaining to the project as mentioned in the said article.” Similarly, MRCB also confirmed that it had not received any letter of award from the Government of Malaysia in relation to the project mentioned in the said article.

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Will the clean up of the Klang River look into the sources of pollution? Why can’t this cleanup be handled by the DID?

Keep an eye on these deals to ensure that public interest is protected.

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Andrew I
Andrew I
18 Jan 2011 10.36am

Oh dear, those from the anti-PR camp seem to have lost their zest for accountability and transparency.

Never mind, it’s all in the previous articles. All you need to do is raise all those salient points here.

Don’t forget to thank them for all their contributions. Personally, I like the “defending the indefensible” contribution.

semuanya OK kot
semuanya OK kot
17 Jan 2011 9.03pm

DAP has spelt out in deatail why it is cheaper for the goverment to take over the highway. The river clean-up was initially mooted by PR, but BN “reliveved” it of the “burden”.

Andrew I
Andrew I
17 Jan 2011 7.58pm

Here are some real fat juicy ones involving not millions but billions. Let’s see as much enthusiasm to question these as sPICE. Now, who from the anti-PR camp would like to start first?