Who should pay for easing traffic congestion?

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Who should pay for easing traffic congestion?

Postby admin » Thu Jul 08, 2010 3:19 am

AS roads in the Klang Valley become increasingly choked by the day with more vehicles being sold and driven, it comes as no surprise that the Government has decided to act.

Apart from studying a plan to build a mass rapid transit system, one way of dealing with the immediate concern of congestion is to build more roads and, where applicable, to widen existing roads.

The Government has done just that when it asked PLUS Expressways Bhd to construct a fourth lane along certain stretches of the expressways.

Those stretches are between Shah Alam and Rawang, Shah Alam to Jalan Duta and a section from Nilai (North) to Seremban, an indication that the road network of the greater Klang Valley is in need of expansion.

The cost of the latest lane widening is RM1.14bil and the company in a filing to Bursa Malaysia on Tuesday said details of the proposed funding and other arrangements were being discussed with the Government and the company’s bondholders and shareholders.

PLUS is no stranger to the widening of its highways. In 2005, the company embarked on widening certain stretches of its highways at a reported cost of RM752.5mil. Adding the cost of the removal of the Jelapang toll plaza and other ancillary costs, the total bill came out to RM1.04bil.

The cost of the lane widening in 2005 was borne by the Government and the exercise also saw the toll concession agreement extended by eight years and seven months when the Government took control of the Seremban-Port Dickson highway.

This time around the question is will the cost of the latest road-widening exercise be shouldered by taxpayers or will road users agree to an extension of the concession period?

Unlike the exercise done the last time, there appears to be little stomach for either action as the circumstances now are very different.

Calls to review the concession agreement with PLUS, in part because of the fixed schedule of toll increases, and even nationalise the highway have been voiced loudly and have resonated throughout various parts of the country.

A proposal by Asas Serba - where it has promised to lower toll charges and preserve the current period of the concession agreement - is also an indication that there is a lot of fat to trim from the current agreement.

While some analysts don’t see a problem with the Government footing the bill for the widening of lanes as the highway will eventually be transferred to the Government, the question is should taxpayers foot the bill that can lead to higher revenue and profits for the company during the concession period?

There are also questions over the profit from the construction of the new lanes and whether it is wise to give the contract to a company, and the construction profits to the same company that will be collecting toll on those roads?

Given the deficit the Government has incurred, especially last year, one worry is that if the Government foots the bill like it did the last time, then that will mean an additional outlay of taxpayer money on top of a subsidy on toll roads for all highways which, according to Pemandu, is projected to hit RM1.2bil this year.

Also, should there be some sort of cost sharing or should PLUS foot the bill altogether? Financially, PLUS is capable of doing just that. Broker reports have indicated that PLUS is in the pink of health given its gearing and cash flow.

Read the full article:
http://www.starproperty.my/PropertyScen ... x/5718/0/0
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RM1.14bil funding for 4th lane on NS and NKVE highway no pro

Postby admin » Thu Jul 08, 2010 3:20 am

PETALING JAYA: Analysts do not expect funding of the RM1.14bil highway-widening works in Malaysia to be an issue with PLUS Expressways Bhd.

MIDF Research, in its report yesterday, said funding for the project would not be a big problem for PLUS due to the company’s large cash reserve of RM3.2bil and the potential cashflow that the highways could generate.

On Tuesday, PLUS announced that it had been awarded a contract by the Government to build a fourth lane along certain stretches of the North-South Expressway and the New Klang Valley Expressway.

The stretches were Shah Alam to Rawang, Shah Alam to Jalan Duta and a section from Nilai (North) to Seremban.

PLUS said the details of the proposed funding for the fourth-lane widening works were “under review”.

“In the first quarter of 2010, PLUS generated RM406.4mil in cash. Also, due to the current gearing level of 1.4 times, PLUS could easily raise funding through borrowings, which would increase its gearing only to 1.5 times,” MIDF Research said.

The research house noted that PLUS had been compensated by the Government before.

“The previous third-lane expansion had an estimated cost of RM1.04bil, which the Government compensated from PLUS’ pre-payment of government support loans of RM962mil.

“The Government also allowed PLUS to take over the Seremban-Port Dickson Highway and the extension to the North-South Expressway by eight years and seven month, valued at RM361.9mil,” it said.

An analyst said PLUS could start to see returns once construction of the fourth lane was completed, possibly within the next two to three years.

“A lot of developments are coming up these days, especially in the outer parts of Kuala Lumpur like Sungai Buloh and Rawang because it’s becoming increasingly expensive to purchase property within the city.

“As such, a lot of people are purchasing property in the outskirts of KL. These would bode well for PLUS and we expect good traffic growth, going forward, despite the routes being matured highways.”

AmResearch, in its report, reckons that PLUS could tap into its existing Islamic Medium-Term Notes facilities to raise part of the required funding.

“We forecast PLUS’ net gearing levels at 128% for its financial year ending Dec 31 (FY10) against 134% in FY09.”

MIDF Research also said the growing population warranted a fourth lane. “The population of Shah Alam has grown over the past five years at an estimated compounded annual growth rate of 11.8% to about 620,000. The current population in Rawang is estimated to be 120,000.”

“It is possible that the population of these two ‘centres’ could grow at an even faster rate with the continuing ‘exodus’ of population to the outer part of greater KL due to the rising house prices in the capital and the expected new development of Sungai Buloh.”

Read the full article:
http://biz.thestar.com.my/news/story.as ... c=business
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