Never-ending Penang bridge tolls – but nothing for Penang

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The federal government should hand over both Penang bridges to the Penang state government – so that the state can use the tolls as a form of congestion pricing and finance public transport infrastructure in Penang.

The announcement that the expiry of the first Penang Bridge concession with UEM would be extended from 2021 to 2038 drew howls of protest.

But then this is a logical consequence of the decision to push for the second Penang bridge (a project which both the federal and Penang state government – current and previous – supported). The second bridge, we are told, would have a toll rate of RM8.50 for cars. (The first bridge has a toll rate of RM7.) After all, who would use the second bridge and pay RM8.50 in toll, when they could drive for free on the first bridge after 2021?

But hang on a sec. Wasn’t the 25-year concession for the first bridge supposed to expire in 2018?

When did it get extended to 2021?

According to UEM Builders Annual Report 2007:

The Government and Mekar Idaman Sdn Bhd entered into a Concession Agreement dated 30 September 1993 in connection with managing, maintaining and operating toll collection services of the Penang Bridge for a concession period of 25 years.

On 23 November 1995, Penang Bridge Sdn Bhd, (“PBSB”) (a wholly owned subsidiary) and Mekar Idaman Sdn Bhd entered into a Novation Agreement with the Government whereby, with the approval of the Government, Mekar Idaman Sdn Bhd assigned its rights and transferred its liabilities and obligations under the Concession Agreement to PBSB.

On 30 August 2007, PBSB has entered into a Supplementary Concession Agreement with the Government of Malaysia for extension of the Concession Period by 3 years and 7 months from June 2018 to 31 December 2021.

Source: www.gerakan4u.com

So there was already a quiet three-year extension from 2018 to 2021 to ‘compensate’ for the third time a toll hike had been cancelled. That’s ironic considering that toll revenue collected from the Penang Bridge far outstrips the cost of constructing the bridge. Now, the concession has been extended to 2038 – on what grounds I don’t know. (Oh, I forget what I said earlier, they have a new bridge which no one will use if the first bridge becomes toll-free.) And toll profits from both bridges will go to the federal government.

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I was told by someone involved in the construction of the first Penang Bridge that Lim Chong Eu wanted the Penang Bridge to come under the Penang state government. But alas, it was not to be. When completed, the Bridge came under the federal government (with the Penang state government, if I recall correctly, getting a small share of the revenue). But even that disappeared in 1993, when the bridge was privatised to the UEM Group – at a time when Mahathir was PM, Daim Zainuddin was finance minister and Koh Tsu Koon was Penang chief minister – on the pretext that the Yen had grown stronger and the federal government wanted to repay the loan on the bridge in full. Since then, the bridge has generated huge profits for the concessionaire – with Penang state getting nothing.

Blog reader Plain Truth adds:

The parent company of Mekar Idaman was the Bursa-listed Intria Bhd, which was in turned controlled by UEM with Renong as the ultimate parent company. Both UEM and Renong had to be bailed out via a taxpayer-funded privatisation in 1999/2000.

These Umnoputras sat on cash cows, piled up the debts and proceeded to go bust. But then again, during Dr M’s era, these things were hardly amazing.

As usual, not a squeak from our … Koh Tsu Koon.

What would be a more progressive alternative?

It is important for both bridges to come under the Penang government as part of an overall restructuring of transport in Penang, in line with the principle of subsidiarity (local affairs managed by local government).

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At present, PBSB comes under UEM Group Bhd, which is wholly owned by the Finance Ministry’s Khazanah. PBSB has probably collected many times the original RM800 million cost of the first bridge, which will now fall under a new company, Projek Lebuhraya Usahasama Bhd (PLUS), to be owned by UEM (51 per cent) and EPF (49 per cent).

The Penang bridges should be handed back to Penang state and a new Penang Transport Commission should be set up. This Commission should control the ferry services, both the Penang bridges, RapidPenang and the ferry services – all of which should be owned by the public/Penang state government. The Commission should also look into the possibility of surface rail – LRT and/or trams services.

Contrary to the calls for the first Penang Bridge toll to come to an end, the bridge tolls on both bridges could be turned into a form of congestion pricing for private motor vehicles or single-occupancy vehicles entering the island. The profits from both the Penang bridges could then help to subsidise passenger ferry services and Rapid Penang buses, including the shuttle bus service across the bridge. The bridge profits could also finance LRT/tram services in the state (including a cross-channel rail link), the construction of bicycle lanes and improvements in pedestrian walkways to make the streets more people-friendly.

Of course, none of this will happen as long as the BN insists on managing public transport in Penang by remote control from Putrajaya. Public transport in Penang must be managed and controlled by the Penang state government. And that is another reason why we desperately need change.

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ccb

fat hopes from this corrupt federal govt. what is enough for them. RM250m cow fiasco is drop in ocean. how many billions of toll money have they collected? i lived in PJ. During peak evening hours, you queue 15 mins to pay your Eastin hotel toll and crawl another 20 mins at least to the NKVE toll to get to subang. On a lucky day, you queue another 5 mins there to pay, Thats piratisation for the benefit of the people according to hoodoo economics from Kerala. anil, you will probably ask why not try public transportation. May be I… Read more »

Tom

Anil,

In wanting to comment on the Penang Bridge, one needs to do extensive research as did PS — I urge you to read http://satdthinks.blogspot.com/2011/11/17-year-punishment-of-penangites.html

Tom

Why should the rest of Malaysia pay to make Penangnites comfortable, have they not paid enough? No toll hike = extension in concession I think is fair – I’ve had enough of Penagnites using my taxpayers money to pay compensation, hell G should increase the rates and let them suffer as how we suffered! If we have to pay toll why shouldn’t Penangnites. And why is it that we Malaysians make hell of a noise when it comes to paying toll – we are one of the most subsidize country in the world. Our neighbours in Philippines, India and Indonesia… Read more »

Kevin

Tom, I have to agree and disagree with you because Penangites do pay tax, just like everyone else. In fact, it pays more tax then most other states in Malaysia. But I agree because you are also right, it is not fair to only abolish toll for the Penang Bridge. In fact, toll for most of the highways in Malaysia should be abolised particularly PLUS. First of all, the money used to build the bridge and highways did not fall from the sky. It came out of the pockets of all Malaysians and Malaysia’s resources which belongs to all Malaysians.… Read more »

tunglang

It is simple arithmetic:
Computer simulation a scenario of all tax paying Penangites not paying any taxes.
And see what will happen to the national tax coffers used to pay for other states’ development, including yours sincerely.

Still have the financially dead-brain to punish Penangites?
As for who is using more of Penang Bridge and thus pay more bridge tolls to enrich some corporate entities, go stand at the toll booths on both sides and calculate yourself. Just calculate those vehicles with Penang plates only.

Tom

While simple math may dictate that construction cost of RM800 million, this however is not inclusive of land acquisition, and while the RM800 million may have been recouped by the concessionaire, one always forget the cost of maintaining the bridge – OPEX and CAPEX. Having worked at P1B before, I know for a fact that it cost close to RM800 million to widen the Bridge from two to three lanes both ways. And I urge you to think twice before you or anyone say “bloated cost” or pose the question “how can it be the same as 25 years ago,… Read more »

Ctulhu

Aiyo, last time the cost to widen the bridge was what, 800 mill? Widen only. Now, 25 years later, the cost to maintain and operate the thing has increased. Do you remember what you paid for roti canai 25 years ago? Now in Bangsar it’s RM1.20 already.

Why don’t we all go to Bangsar and demonstrate about bloated costs?

Wake up la. Jangan tidooo.

hasbula

Why stay in bangsar? Only lembu stays there in condo, right?

Plain Truth

The parent company of Mekar Idaman was the Bursa listed Intria Bhd which was in turned controlled by UEM with Renong as the ultimate parent company. Both UEM and Renong had to be bailed out via a taxpayer funded privatisation in 1999/2000.

These Umnoputras sat on cash cows, piled up the debts and proceeded to go bust. But then again, during Dr.M’s era, these things were hardly amazing.

As usual, not a squeak from our favourite political eunuch Koh Tsu Koon.

tunglang

There is a ‘smart’ saying in some Chinese business circles: If you want to build thro’ blood, sweat and tears, your own business into something big and profitable and sendirian berhad or go public (the more monopolistic the better), be prepared for early takeover from the Apanama corporate raiders. You can’t keep a cash cow to yourself for long in Boleh Land, much less a business legacy. Part of the reasons why many local entrepreneurs go global, thrive and profit beyond the reach of Apanama privatization mania. Part of the reasons why Malaysian brands are few and global, can’t last… Read more »

Sg. Nyior

By handing back public bridges and public transportation to the state government, are we not setting a precedent for other states to follow – should the 2nd Singapore Crossing be handed to Johor. We all want things to be better but can the opposition / state government confirm or promise that they can do a better job? When campaigning, DAP said no more tolls for Sg. Nyior but hey guess what, the toll is still there!

Robert Teh

Anil, It’s about time you comment on this Penang Bridge Toll collection extension till 2038! I was wondering you are beginning to buy UEM’s argument for the extension. Yes, you said it right – they can’t have one bridge charging RM zero and another charging RM8.50 – this doesn’t make business sense. So, extend the toll collection on Bridge 1 till long enough for Bridge 2 to recoup its ‘jacked-up’ cost – otherwise you will make a lot of rich people ‘poorer’!!! I say, go for the ‘kill’, go for free competition, bring on Bridge No.3! Let’s see who will… Read more »

tan, tanjung bungah

Hi everyone,

We must change the federal govt in the next GE, with greater promise that a Federal Govt in-sync with the PR Pg State Govt would seriously consider what Anil suggested and what Penangites would fervently support and want THAT Pg Bridge be handed to the State Govt. The revenues could then be used to effect a better transportation plan for the State!

Racheljansz

Hi say men, you think these guys going to hand over the goose that lays the golden egg?
In your dreams!
In your dreams!

What happen to the lopsided CONtracts?
NFA!

Richie Hee

Penangites should back the new tunnel linking Gurney Drive to Bagan Ajam, in order not be held ransom by the high cost of using BN’s bridges.

Chronic

That’s going to be more expansive as it will be more costly to build and maintain

Kevin

Not necessarily. The toll for the bridge(s) is(are) more costly because the agreements are lopsided and allows the company to reap huge amounts of profits. The cost of the second bridge kept increasing before the bridge was even half built. If the state on the other hand can build a tunnel and ensure that it is state controlled and the rates are lower than that of the two bridges, then penangites will have a choice of whether to use the bridge or tunnel. This can be done, if there are no leakages along the way. Competition is always good to… Read more »

AlbertG

Doesn’t matter if the toll for the tunnel is higher than the bridge. Definitely support State Government, We must not let UMNO BN hold us by the …

AlbertG

So Penangites, should we get angry, and vote for change? The choice is yours. Gerakan, MCA, MIC what is your say. Now we pass the ball to you 3 lackeys.

Nabil

Vote for BN and it will brings you the highway to Greek tragedy!

Miamar

But has Pakatan been keeping its promise though? Look at the Sungai Nyiur toll? Wasn’t it part of Guan Eng’s manifesto to abolish it?

If Pakatan wins Johor in the next GE, does that mean State should takeover the Causeway and Second Link?

Kevin

One should understand that PR promised to try and abolish the toll at sg nyiur. It cannot simply abolish the toll because it is under federal jurisdiction. Secondly, the state gov tried to create a bypass to the toll but later realised that the toll operator could and would definitely sue the state for millions.

However, agreed that PR should stop making promises and statements they know is impossible for them to fulfill without federal power.

tunglang

Now we pass the ball to you 3 lackeys.

Why pass (it) when they Boh Lan Hoot don’t have … courage, manly courage … to do the right things at the right time for the right reasons.
Keep the precious ball for the coming GE13. And CHANGE Malaysia …

bigjoe

The current bridge toll was extended to 2038 because of the ‘upgrading’ or better known as the Penang Bridge Widening project. For and activist on transport, pretty bad not to have kept up with this very very old trick to extend concessions. PLUS have been using it for a while now. I think Metramac with old Kepong toll was the first to do it. – they do a bit of work and gets a big whopping increase in concession..