Published by Business Times on 1 September 2012. By Sharen Kaur.
Malaysian Resources Corp Bhd (MRCB) hopes the government will take over the 8.1km Eastern Dispersal Link (EDL) in Johor and its debt as soon as possible, as the highway is eating into the group's profitability.
"We will also be seeking compensation from the government. In the meantime, we will focus on existing projects and other ventures," a company official told Business Times. However, he declined to say how much MRCB will be seeking from the government.
This is attributed to non-recognition of revenue from the EDL due to non-tolling issues. The EDL, which opened on April 1, became a hot topic after it was announced that road users to and from Singapore face a RM15.30 toll.
The concession agreement stated clearly that toll collection will be at the CIQ and start in May, which will then allow MRCB to meet its debt repayment obligations.
As at December 31 2011, MRCB had senior and junior sukuk amounting to RM1.06 billion, which were secured by the EDL project and repayable in a series of yearly redemption commencing in 2018.
MRCB is required to service the finance costs - to the tune of RM7 million a month - despite no toll charges for the EDL. It is learnt that MRCB has accumulated some RM40 million start-up losses for the EDL when it opened in April.
At the company's shareholders meeting in April, MRCB chairman Tan Sri Azlan Zainol expressed hope that the government will consider buying the EDL at market value.
"We hope that there will be a win-win situation for the government, the people and MRCB shareholders. We do not know the market value but the total project cost was RM1.4 billion," Azlan said. MRCB has been negotiating with the government since May for some form of compensation to cushion the operating costs as well as the possibility of agreeing in-principle to take over the expressway.
On Thursday, Minister in the Prime Minister's Department Tan Sri Nor Mohamed Yakcop said the government will acquire the EDL from MRCB to settle issues related to policy and toll charges. He said the cost and terms are expected to be known before the end of the year
Related reports:
The federal government said on Thursday that it will buy out the EDL in Johor Baru from concession holder Malaysian Resources Corporation Berhad (MRCB) in an apparent move to prevent a potential six-fold toll increase for round trips to Singapore from becoming election fodder for Pakatan Rakyat PR in the Umno bastion... While the details of the takeover were not announced the deal is widely expected to cost the government RM1 billion and could potentially push the country’s public debt levels closer to the legal ceiling of 55 per cent of gross domestic product (GDP). The country’s debt currently stands at about 53 per cent of GDP... The tolls concessions many of which have been criticised as being sweetheart deals came back to haunt the Barisan Nasional however as bitter opposition to toll rate increases helped contribute to record losses during Election 2008.
http://www.themalaysianinsider.com/malaysia/article/putrajaya-urged-not-to-shell-out-for-loss-of-future-profits-in-edl-takeover/
By paying MRCB anything more than RM1.3 billion, it will show that BN is abusing its powers to profit its crony companies and is failing in its fiduciary duty to protect and defend the interest of ordinary Malaysian taxpayers. — DAP MP Tony Pua
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