Ministry of Finance (MoF) in Malaysia has announced the proposed acquisition of four highway concessions in which Gamuda Berhad (Gamuda) has a significant stake. The four highways involved are Lebuhraya Damansara Puchong (LDP), Sistem Penyuraian Trafik KL Barat (SPRINT), Lebuhraya Shah Alam (KESAS) and SMART Tunnel (SMART).

The MoF has offered MYR 2.47 billion (US$ 596 million) for LDP, MYR 1.98 billion (US$ 478 million) for SPRINT, MYR 1.37 billion (US$ 330 million) for KESAS and MYR 369 million (US$ 89.09 million) for SMART. In total for all four concessions the government is offering MYR 6.2 billion (US$ 1.5 billion) to Gamuda.

The completion of this offer is subject to due diligence, the requisite shareholders’ and creditors’ approval for each concessionaire and the final approval by the Cabinet. If the acquisition process of these highways is successful, the Government will acquire the highway concessionaires on 31 December 2019 through a special purpose vehicle (SPV) wholly-owned by the Minister of Finance (Incorporated).

The acquisition of these 4 tolled highways represents the first steps in reducing the burden of highway users. The Government had negotiated earnestly with the concessionaires to make a fair acquisition offer such that it not only maximises the returns for the people, and not result in any financial burden for the Government at the same time.

The SPV will finance the offer of MYR 6.2 billion (US$ 1.5 billion) by way of bond issuance. The collection of congestion charge will be sufficient to service the debt, as well as to finance the operation and maintenance costs of the highways without requiring additional budget allocation by MoF. In other words, the acquisition cost will be self-financing through the collection of the congestion charge and will not require any government expenditure.