Report: Govt to issue debt papers worth RM43b to buy 15 highways

R. Loheswar
Khazanah Nasional Bhd will reportedly set up a special-purpose-vehicle called a highway trust, which will act on the government’s behalf to buy the concessions. — Picture by Hari Anggara

KUALA LUMPUR, Aug 19 — The government is planning to buy 15 highways for a total of RM43 billion through the issuance of debt papers to concessionaires.

English daily New Straits Times reported today that the government's plan is to acquire PLUS Malaysia Sdn Bhd’s highways for RM30.8 billion, Projek Lintasan Kota Holdings Sdn Bhd (Prolintas) for RM3.1 billion, Gamuda Sdn Bhd for RM5.6 billion and IJM Corp Bhd for RM2.7 billion.

Once all parties have agreed with the value, Khazanah Nasional Bhd through a special purpose vehicle (SPV) will issue perpetual debt papers.

Paper A will be valued at RM30.1 billion while Paper B at RM12.7 billion.

“Khazanah Nasional Bhd will set up a special-purpose-vehicle called a highway trust, which will act on the government’s behalf to buy the concessions,” a source told the New Straits Times.

The source said Paper B comes with a government guarantee while Paper A comes with RM10 billion cash with a carry on coupon value of RM1.6 billion. This means SPV will buy the concessions for RM10 billion in cash and RM20.1 billion in debt.

“This way, the deal, which is a privatisation initiative, will not burden the government with a high debt amounting to RM42 billion unless it pursues a concession buyout,” said another source.

“With this proposal, the SPV’s costs would only involve paying the coupon and maintaining the highways. It can later exercise its option to redeem the debt papers. This way, the public can expect toll-free highways in the future.”

With this deal, road users would save up to 45 per cent over time before toll-free roads come along in 2038.

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