HIGHWAY concessionaires and bankers are revisiting the proposal mooted last year to list a business trust with highways as underlying assets, according to sources familiar with the matter.

Towards this end, it is believed that at least one concessionaire with several highways mainly in Kuala Lumpur and Selangor has made an early representation to the government for the listing of a highway trust.

The objective is to make the capital markets pay for the highway assets, without the government forking out any money, the sources say.

“The highway trust will be offered to investors as an investment that offers a yield of more than 4%. In return, the concessionaires will get to realise some of their investment. The concessionaires will also manage the maintenance of the highways,” a source tells The Edge.

The proposal is a private-sector initiative to reduce the toll rates on the city highways and ensure that a structure is put in place for its maintenance. For the highway trust to take off, it needs the approval of the federal government, which will have to make adjustments to the concession agreements.

The previous government had wanted to  nationalise all highways in the country and abolish tolls. Towards this end, in February 2019, the Pakatan Harapan government proposed to buy out Gamuda Bhd’s concessions in four highways.

The PH government then issued letters of offer to buy over the four highway concessionaires partly or wholly-owned by Gamuda in June for RM6.2 billion. The concessionaires are 70%-owned Kesas Holdings Bhd, 52%-owned Sistem Penyuraian Trafik KL Barat Holdings Sdn Bhd (Sprint Holdings), 44%-owned Lingkaran Trans Kota Holdings Bhd (Litrak) and Projek SMART Holdings Sdn Bhd (Smart Holdings), a 50% joint venture with MMC Corp Bhd.

The highways involved are Lebuhraya Damansara-Puchong, Western Kuala Lumpur Traffic Dispersal Scheme (SPRINT), Shah Alam Expressway (Kesas), and Stormwater Management and Road Tunnel (SMART) within the city centre.

However, discussions fell through towards the end of the year and after the government changed in February last year, the deal was put on the back burner. In June last year, it was reported that the Perikatan Nasional government would not go ahead with the plan to acquire the four highway concessionaires.

In August, Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed said the government was studying a proposal to put all the nation’s 35 highways, including six that are currently under construction, under one highway trust.

“The operative phrase here is ‘no public money will be involved’,” says another source. “The market pays for the highways. Tolls will continue to be charged, but with reduced rates in return for longer [concession] tenures.”

With stakes in four highway concessionaires, Gamuda is among the largest owners of highway assets in the country.

When contacted for comments on whether the group has broached the matter with the government, Gamuda declined to comment.

In the six-month period ended Jan 31, 2021 (1HFY2021), the water and expressway concessions business contributed 45% of the group’s net profit of RM232.4 million. The net profit from the business decreased 13% year on year to RM104.5 million.

The largest highway concession holder in the country is PLUS Malaysia Bhd, which is owned by Khazanah Nasional Bhd and the Employees Provident Fund.

PLUS owns the concessions for North-South Expressway, New Klang Valley Expressway, Seremban-Port Dickson Highway, Malaysia-Singapore Second Crossing, Penang Bridge and East Coast Expressway Phase 2.

The privately held MTD Group is also another highway operator, holding the concessions for the Kuala Lumpur-Karak Highway and the East Coast Expressway Phase 1. Meanwhile, Ekovest Bhd is the concession holder for Duta-Ulu Kelang Expressway Phases 1, 2 and 3.

IJM Corp Bhd also holds highway concessions — for Besraya Highway, New Pantai Expressway and Lebuhraya Kajang-Seremban. Bina Puri Holdings Bhd holds the concession for Kuala Lumpur-Kuala Selangor Expressway (LATAR).

Meanwhile, Projek Lintasan Kota Holdings Sdn Bhd, which is 100%-owned by Permodalan Nasional Bhd, owns the concessions for Ampang-Kuala Lumpur Elevated Highway, Guthrie Corridor Expressway, Lebuhraya Kemuning-Shah Alam, Kajang SILK Highway, and two highways under construction — Sungai Besi-Ulu Kelang Expressway and the Damansara-Shah Alam Elevated Expressway.