Eight-year extension of PLUS North-South Expressway concession should not be signed without parliamentary consultation and consent

on the urgent motion on the proposed eight-year extension of the PLUS North-South Expressway concession
by Lim Kit Siang

(Parliament, Tuesday): Three months ago, I had specifically asked the Works Minister, Datuk Seri S. Samy Vellu  whether without the knowledge of the people and MPs,  the government had secretly agreed to extend the North-South Expressway (NSE) concession by another eight years, making it a 50-year “cash cow” concession for PLUS till 2038?  

This was because in responding to nation-wide protests against another round of North-South Expressway (NSE) toll hike, Samy Vellu had said in mid-December last year that the government would have to pay RM38 billion in compensation  to PLUS over the next 33 years if the 10% NSE toll hike on 1.1.2005 was not honoured – i.e. that the concession would go on until  2038, which was news to Malaysians as well as MPs! 

As I pointed out at the time, Samy Vellu’s claim of RM38 billion compensation to PLUS over the next 33 years was ridiculous when NSE concession was for 42 years from 1988,  ending in 2030 – or in another 25 years.  In 1999, the 30-year NSE concession (1988-2018) was extended by 12 years till 2030, following  a renegotiation of the concession providing for a new toll structure, with increments every three to five years instead of annually in the original contract. 

I said I did not believe Samy Vellu was senile to make such a colossal mistake about the period of the NSE concession, which could only mean that without public  or parliamentary knowledge, the Works Ministry had secretly awarded another eight-year extension of the NSE concession, giving it a 50-year tenure! 

My question and suspicion last December have now been  proved right with the announcement by Samy Vellu last Thursday  that  the government has agreed to extend the NSE concession period by eight years and seven months under a package to upgrade the expressway, adding two additional lanes in the Seremban-Ayer Keroh and Rawang-Tanjung Malim stretches and relocating the Jelapang toll booth in Ipoh. 

Samy Vellu said that the RM1.37 billion upgrading  would be financed by a Federal Government write-off of its loan of RM962 million to PLUS, the taking over of the Seremban-Port Dickson Highway by Plus estimated at RM50.27 million and the extension of the concession estimated to cost RM361.89 million.  PLUS would also get a commercial loan of RM900 million to carry out the additional work. 

Members of Parliament must remember the Dewan Rakyat proceedings on 14th December last year which the New Straits Times described  as “a rare show of unity and solidarity in Parliament”, with MPs, Barisan Nasional and Opposition, united in their opposition to the government’s move to allow PLUS Bhd to increase its toll charges by 10 per cent the following year. 

The BN MP for Sri Gading Datuk Mohamad Aziz was one of the outspoken voices against the 10% toll increase, telling the Works Minister that the toll hikes were a burden to the entire Malaysian population of 25 million people! 

Works Minister Samy Vellu, who was in the House, sought to placate the united opposition and anger of MPs by promising to bring the issue to the Cabinet’s attention the next day. 

What is the outcome of the Cabinet’s consideration of the unanimous stand of Members of Parliament, Barisan Nasional and Opposition, opposing the 10% NSE toll hike from 1.1.2005?

The answer is to be found in  New Straits Times’   front-page headline report dated 17th December 2004, “That 10% Hike Stays”, which  blazoned the quote from Samy Vellu in huge letterings, viz: 

“The agreement states that the Government has to pay PLUS RM154 million in compensation for not raising the toll charges by 10 per cent.

“’If we stop the North-South Expressway toll hike it would be a big burden on the Government. We would have to pay RM38 billion to PLUS over the next 33 years. This money could be utilized for other projects,’said Works Minister Datuk Seri S. Samy Vellu” 

For the past three months, I have posed the following questions which I have not been able to get any answer. I hope the answers would be forthcoming in this debate from the Deputy Works Minister’s reply:

  1. Wasn’t Samy Vellu aware of these compensation figures  when the NSE toll hike was raised by MPs in the Dewan Rakyat on 14th December 2004  before the Cabinet meeting, and if so, why weren’t MPs informed of these shocking figures?  Had Samy Vellu been guilty of a gross breach of parliamentary privilege in concealing or withholding important information from Parliament, the highest chamber of the land, or did he  come into possession of these figures only after the parliamentary meeting?  
  2. Secondly, why must the government pay compensation to PLUS for 33 years till 2038, when as in December 2004,  the 30-year NSE concession which started in May 1988 is to end in 2030 after a 12-year extension in 1999?  With another 25 years to run for the concession, at the compensation rate of RM154 million a year, the total compensation liable till the end of the concession is RM3.85 billion – one tenth of Samy  Vellu’s hyperbolic claim of RM38 billion. Unless  the government  had secretly – behind the back of Parliament and the people - given another eight-year extension of the NSE concession to make it a 50-year “cash cow” to “print money”  to  PLUS from 1988-2038?
  3. Why  must the government pay PLUS RM38 billion in compensation over the next 33 years when compensation for 33 years at RM154 million a year does not add up to RM38 billion but RM5 billion?
  4. When Samy Vellu said PLUS was entitled to RM38  billion compensation from the government over the next 33 years  if it is not allowed a 10% increase in the toll rate, does this mean that in the next 33 years PLUS is entitled to a gross toll collection of  some RM380 billion from the Malaysian NSE users?

One issue before the House today is whether what happened inside the House, to quote Shakespeare, is just “Full of sound and fury, signifying nothing”; that even the unanimous stand of MPs, of both Barisan Nasional and Opposition is completely of no consequence as Parliament is nothing more than “rubber-stamp” to the Works Ministry or government for all its privatization contracts and extensions, with no meaningful role in decision-making or even consultation?

The Deputy Prime Minister, Datuk Seri Najib Tun Razak had said at the Parliament Speaker’s Hari Raya Open House on the last day of the budget parliamentary meeting on 14th December 2004 that Parliament is not a “rubber stamp”. 

If so, the Cabinet should heed the voice of Parliament, especially when it is the unanimous position of MPs on both sides of the House. In fact, if the Cabinet upholds the principle and practice of parliamentary democracy, it must accept the fundamental principle of the supremacy of Parliament and  the Cabinet and the Executive must yield to the unanimous view of Members of Parliament – whether on the issue of the unfair  10% NSE toll hike or any other matter. 

When Datuk Seri Abdullah Ahmad Badawi became Prime Minister 17 months ago, he had promised a more accountable, transparent and consultative form of governance.  His government also announced a fundamental review of privatization contracts to address the problem of privatization deals which are so lop-sided against the long-term interests of consumers and the ordinary rakyat. 

The North-South Expressway is one such mega-privatisation which had been the subject of repeated public demands for a review to render it more fair to the motorists. 

The Abdullah administration’s pledge of a more accountable, transparent and consultative form of governance would suffer a grave credibility blow when the government has not only failed to get the one-sided NSE concession reviewed and readjusted, but allow another unfair extension of the NSE concession for another eights years without any public input, discussion or consultation. 

Parliament, with the unanimous support of MPs from both sides of the political divide, should ask  the Government not to  sign the third agreement to extend the PLUS North-South Expressway concession by another eight years and seven months without consultation and consent of Parliament. 

MPs, Barisan Nasional or Opposition, should take a common stand to demand that the new extension of the NSE concession should first be referred to a Parliamentary Select Committee before it is signed, as Malaysians are entitled to know why the  government has to  compensate PLUS RM38 billion for the next 33 years as one condition of the new extension as far as the toll structure is concerned. 

Secondly, how the government review of the privatization contracts which are lop-sided and short-changing the government and public announced by the Deputy Prime Minister Datuk Seri Najib Razak in July last year had impacted in the proposed  extension of the North-South Expressway concession – such as making the process more transparent as making the NSE concession a public document? 

Thirdly, whether the eight-year extension of the NSE concession would now end up with motorists having to pay a toll of RM 300 travelling 848  km from Johore Bahru to  Bukit Kayu Hitam near the conclusion of the 50-year NSE concession. 

Fourthly, what guarantee is there that the PLUS NSE concession would not be further extended in future  to become a 80-year or even 100-year NSE concession? 

Fifthly, have other options been seriously considered apart from continuing to  fund PLUS to widen the NSE so that it could pile up even greater profits, by increasing the burden of the people?

For instance, why should PLUS be compensated for upgrading the expressway? If there are defects and bottlenecks that need to be rectified to ensure the smooth functioning of the expressway, it should be the obligation of the concessionaire to carry out such works at its own expense, which will result in higher traffic volume, higher toll revenue and greater profits.  An expressway concession which is not lopsided and does not short-change the public would have such a provision, as bigger and better roads will only  bring higher income and greater profits  to the concessionaire, and there can be no justification for the expenditure of public funds for  such a purpose. 

Instead of spending over RM1 billion to finance PLUS to widen its expressway in two stretches, the government should consider using this money to upgrade the old highway to expressway standards, so that it becomes a proper alternative to the NSE. 

The Works Ministry seems to be  over-solicitous to defend the interests of PLUS.  Samy Vellu  announced recently that the government will amend the law to allow PLUS to fine motorists for “overstaying” on the Expressway and suspected of cheating toll payment. 

Two Fridays ago on 18th March 2005, an accident at NSE km 210 near Pedas at about 10 pm. caused a five-hour traffic jam and standstill between the Seremban-Ayer Keroh stretch, which would not have happened if PLUS had taken its NSE responsibilities seriously to clear any traffic obstruction in the shortest possible time.    I have received for instance the following SMS:

“My husband, Kuan Kok Keong, met the terrible highway traffic jam on 18 night. He depart KL at 9 p.m. arrive Simpang Rengam exit next morning 5.30 am.” 

Is Samy Vellu prepared to amend the law to require  PLUS to compensate motorists who  are held up on the expressway for an excessively long period because of massive traffic jams in violation of its pledge to provide a “smooth, safe and fast journey”? 

I call on all MPs to be consistent in holding the privatization process, particularly for expressways, to greater accountability, and to take a unanimous stand that there should be no  signing of a third extension of PLUS’ NSE concession without parliamentary consultation or even consent, for two reasons: 

  • End the  history of one-sided privatization contracts over-solicitous of the corporate interests of the concessionaires at the expense of the consumers and motorists.
  • To give meaning to the pledge  by the Prime Minister to usher in a  more accountable, transparent and consultative form of governance, where Parliament’s independent role from the Executive in keeping with the doctrine of separation of powers is fully respected.



*  Lim Kit Siang, Parliamentary Opposition Leader, MP for Ipoh Timur & DAP Central Policy and Strategic Planning Commission Chairman