KUALA LUMPUR: The longest concession agreement ever, 60 years, has been granted for the West Coast Expressway (WCE), in which the government will have a share of the toll revenue.
In an announcement to Bursa Malaysia, Kumpulan Europlus Bhd said WCE Sdn Bhd, in which it holds 64.2% equity interest, has obtained approval from the Public Private Unit of the Prime Minister’s Department for the proposed privatisation and construction of the long overdue expressway from Taiping, Perak, to Banting in Selangor.
The concession period of 60 years is the longest ever the government has given out, but the latter will have a share of the toll revenue should the traffic volume exceed forecast.
The concession agreement between WCE and the Ministry of Works, on behalf of the government, has yet to be signed. It is awaiting clearance from the Attorney General’s Chambers.
This is seen as a groundbreaking highway concession as in the past the toll revenues are enjoyed by the concessionaire.
According to the announcement, toll revenue in excess of a yet-to-be agreed upon traffic volume will be shared on the basis of 70:30 between the government and WCE Sdn Bhd. Upon the full settlement of a RM2.24 billion government support loan (GSL), the toll revenue will be split 30:70 in favour of WCE.
The project has been delayed for over 10 years due mainly to financing problems. Europlus, controlled by Tan Sri Chan Ah Chye, has difficulty getting funding for the project since the onset of the 1997/98 Asian financial crisis.
To increase the viability of the project, the government will provide the GSL, which will commence in 2013 at an interest rate of 4% per year and an interest subsidy of up to 3% from commercial loans for a period of 22 years.
The concession stretches 316km, of which 224km will be tolled while 92km will be toll free.
Overall, the cost of the project is estimated at RM7.07 billion, of which the land acquisition cost of RM980 million will be borne by the government. Construction of the project will be implemented by WCE via open tender.
The highway was mooted 15 years ago by Chan, who established Konsortium LPB Sdn Bhd (KLPB), the promoter of the project.
Chan holds 27.58% equity interest in Europlus while construction giant IJM Corp Bhd owns a 22.72% stake. IJM also holds a controlling stake in KLPB.
After years of feasibility studies, the project finally started moving in May 2007, when KLPB entered into a concession agreement for the construction of the WCE, which will connect the North-South Expressway at Taiping in the north, to Banting in the south, leading to the Kuala Lumpur International Airport (KLIA).
Prior to the announcement of the WCE approval, Europlus’ share price rose 5.6% to a nine-month high of RM1.31 yesterday from RM1.24 on Wednesday with 1.4 million shares changing hands. With net assets per share of 19.68 sen, Europlus is trading at 6.66 times book value.
For the nine months ended Oct 31, 2011, Europlus reported a net profit of RM5 million on RM14.8 million in revenue, compared with a net loss of RM24.1 million from RM20.5 million in sales for the corresponding period a year ago.
In an announcement to Bursa Malaysia, Kumpulan Europlus Bhd said WCE Sdn Bhd, in which it holds 64.2% equity interest, has obtained approval from the Public Private Unit of the Prime Minister’s Department for the proposed privatisation and construction of the long overdue expressway from Taiping, Perak, to Banting in Selangor.
The concession period of 60 years is the longest ever the government has given out, but the latter will have a share of the toll revenue should the traffic volume exceed forecast.
The concession agreement between WCE and the Ministry of Works, on behalf of the government, has yet to be signed. It is awaiting clearance from the Attorney General’s Chambers.
This is seen as a groundbreaking highway concession as in the past the toll revenues are enjoyed by the concessionaire.
According to the announcement, toll revenue in excess of a yet-to-be agreed upon traffic volume will be shared on the basis of 70:30 between the government and WCE Sdn Bhd. Upon the full settlement of a RM2.24 billion government support loan (GSL), the toll revenue will be split 30:70 in favour of WCE.
The project has been delayed for over 10 years due mainly to financing problems. Europlus, controlled by Tan Sri Chan Ah Chye, has difficulty getting funding for the project since the onset of the 1997/98 Asian financial crisis.
Tan Sri Chan Ah Chye mooted the West Coast Expressway more than 10 years ago, but the Asian financial crisis of the late 1990s made finding financing problematical. Now, with a government support loan and a record-breaking 60-year concession, his dream is set to become a reality.
To increase the viability of the project, the government will provide the GSL, which will commence in 2013 at an interest rate of 4% per year and an interest subsidy of up to 3% from commercial loans for a period of 22 years.
The concession stretches 316km, of which 224km will be tolled while 92km will be toll free.
Overall, the cost of the project is estimated at RM7.07 billion, of which the land acquisition cost of RM980 million will be borne by the government. Construction of the project will be implemented by WCE via open tender.
The highway was mooted 15 years ago by Chan, who established Konsortium LPB Sdn Bhd (KLPB), the promoter of the project.
Chan holds 27.58% equity interest in Europlus while construction giant IJM Corp Bhd owns a 22.72% stake. IJM also holds a controlling stake in KLPB.
After years of feasibility studies, the project finally started moving in May 2007, when KLPB entered into a concession agreement for the construction of the WCE, which will connect the North-South Expressway at Taiping in the north, to Banting in the south, leading to the Kuala Lumpur International Airport (KLIA).
Prior to the announcement of the WCE approval, Europlus’ share price rose 5.6% to a nine-month high of RM1.31 yesterday from RM1.24 on Wednesday with 1.4 million shares changing hands. With net assets per share of 19.68 sen, Europlus is trading at 6.66 times book value.
For the nine months ended Oct 31, 2011, Europlus reported a net profit of RM5 million on RM14.8 million in revenue, compared with a net loss of RM24.1 million from RM20.5 million in sales for the corresponding period a year ago.
