Khazanah & EPF leery of piratising privatising PLUS, but Bosses speak euphemistically for fear

Malaysiakini:

Privatising Plus: Khazanah, EPF bosses share views

by Annabelle Lee B Nantha Kumar & Fadhli Sulaiman


The chief executives of Khazanah Nasional Bhd and the Employees’ Provident Fund (EPF) shared their views on proposals to privatise Plus Malaysia Bhd (Plus) today.

During the Youth Economic Forum in Kuala Lumpur this morning, an audience member asked if the two owners agreed with allowing private firms to run Plus highways if it meant cheaper toll fares but longer toll concessions for users.

Khazanah owns 51 percent of Plus while EPF has a 49 percent stake.

Khazanah managing director Shahril Ridza Ridzuan sidestepped the question but outlined three policy considerations when deciding the nation’s largest toll concessionaire.

“Is it better for it to be owned on behalf of the rakyat or (is it) better to be owned by private entities who are profit-motivated and, therefore trying to squeeze every single dollar of profit out of it?

“Secondly, there is always a question of do you want short term toll (fare) reductions in exchange for longer toll concessions? Any kind of toll reduction, if you have seen any proposals coming up, are matched basically by requiring much longer toll extensions. Do you want to forsake your future for the short-term (gain) today? 

“And the third question is, in order to make it work, you need government guarantees to ensure private entities benefit. These are the three things we need to think about as you think about toll-restructuring in Malaysia,” Shahril (above) said.

Can private firm ensure highway safety?

Meanwhile, EPF chief executive officer Tunku Alizakri Alias answered that any decision to privatise the concessionaire would need EPF’s agreement, and stressed that the retirement savings fund was working well with Khazanah.

He questioned if a private entity would be able to maintain the present safety and quality standards of Plus highways.

“It needs to make sense via financial returns. So we have to go and balance out (whether) this asset is a good asset for us and if we were to go and dispose it now, would it actually make more sense for us to sell it now so I can give the dividends or should I hold on to ensure I have sustainability of returns?

“Returns and benefits should not always be about finance. How about the social benefits that this very important infrastructure (asset) gives to our members? In terms of safety, convenience as well as mobility solutions.

“Because it operates 1,200km (of highways) across the whole of Peninsular Malaysia in that sense. Are we able to go and give it up not knowing whether the high-level of quality that has been enjoyed by you guys is going to be maintained?

“Should there be a sale to another party, EPF has to be comfortable with the other party and EPF has to be convinced that the alignment is also in alignment with our members.

“At this point, Khazanah and EPF - we are in alignment because we serve the people of Malaysia,” Alizakri (above) said to claps from the audience.

Putrajaya is presently considering proposals for acquiring Khazanah’s majority stake in Plus despite the government sovereign wealth fund’s lack of enthusiasm over the idea.

The four known proposals include one from construction conglomerate Widad Business Group Sdn Bhd, which has offered to acquire the concessionaire’s equity interest for RM5.3 billion.

This is part of the firm’s total RM38.34 billion offer for Plus including its equity interest, compensation waiver and debt assumption.

Halim Saad 

Businessperson Halim Saad has offered to acquire Plus’ equity interest for RM5.2 billion.

Private equity fund RRJ Capital has offered RM3.5 billion cash for Plus.

Maju Expressway operator Maju Holdings Sdn Bhd has offered to acquire Plus at an enterprise value for RM34.9 billion.

 

Last week, speculation broke that the Finance Ministry was interested in taking over Khazanah’s stake in Plus to prevent it from being sold to private companies.

Shahril and Alizakri were panellists at a forum entitled “The Corporate Agenda” along with Permodalan Nasional Berhad Chief Executive Officer Jalil Rasheed. The session was moderated by Ernst and Young Malaysia Managing Director Abdul Raus Rashid.