Enemy at the (Toll) gates

Technorati tags: Malaysia, Economy, Toll Rate Hike, Klang Valley, Cost of Living, Concessions

It's official.

Toll Hike for Klang Valley highways announced

After pre-warnings from Rocky's Bru and Jeff Ooi's Screenshots, The Star published the new toll rates yesterday evening. And probably that'll be all she wrote (for the Star, that is). The MSM has been "briefed" by the DPM to not make too much "noise" over the hike.

But surprisingly, it was Bernama that had more details. More on this later.

The Star stated that 5 highways around KL & the Klang Valley will have its rates raised by between 30 sen to RM 1, beginning January 1, 2007. Yes, Happy Fucking New Year, indeed. And all of the increases, going by the news report, are on the closed toll system highways (i.e. the fixed charge ones), namely (figures in parentheses are the current rates):

LDP: RM 1.60 (RM 1, increase of 60%)
Shah Alam Hwy (KESAS): RM 2.20 (RM 1.50, increase of 47%)
Cheras-Kajang Hwy, 9th Mile: RM 1.00 (RM 0.70, increase of 43%)
Cheras-Kajang Hwy, 11th Mile: RM 0.90 (RM 0.60, increase of 50%)
Karak Hwy @ Gombak: RM 5.00 (RM 4.00, increase of 25%)
Karak Hwy @ Bentong: RM 3.00 (RM 2.50, increase of 20%)
Guthrie Corridor Hwy: RM 1.40 (RM 1.00, increase of 40%)

Furthermore, according to Bernama, more toll rate hikes can be expected one year later in 2008.
(for whom the bells toll, and more, in the full post)

Samy Vellu said the next toll hike would be in 2008 involving seven highways. They are Ampang-KL Elevated Highway, the North South Highway, Kulim-Butterworth Highway, Second Link, Seremban-Port Dickson Highway, North Klang Straits Highway and Penang Bridge.

Now, looking at the highways whose rates have been increased, the one that Walski totally disagrees with is the LDP (Lebuhraya Damansara-Puchong). First of all, this highway was pretty badly designed and during rush hour become close to gridlocked, particularly around the Sunway area. And for motorists living on the Kepong side, there aren't many alternatives to take, apart from using MRR2 (the most fucked up highway ever). It would have been a different story if recent improvements to the LDP were actually effective, or if there were alternative roads for motorists to take, or if the KL public transportation system were a viable alternative.

And as is usually the case, increased toll rates will translate to increased transportation costs, which then translate to costlier goods. Another increase in the cost of living - without any discernible increase in quality of life.

On a more cynical note, ever notice that Uncle Sam's hair-weave gets more luscious every time there's a toll increase? Walski really wonders why... well, you make your own assumptions, 'cause Walski ain't sayin' anything else...

The excuse, of course, is always the same: the Government is allowing an increase lower than what was asked for (per the concession contract), thus protecting the rakyat. Too bad the drafters of the contract didn't put in a quality clause, whereby motorists are guaranteed to get from point A to point B within a stipulated time - but then again, it would only benefit the motorists, so why bother, right?

Implementation of the rate increase will come almost one year after the increase in fuel price. Walski didn't say fuel cost, because frankly, the actual cost of producing the fuel is a highly guarded Official Secret in Malaysia.

But let's look at some basic analysis, and Walski has chosen LDP, out of the list of highways. Some information, which can be used for analysis, is available online, if you dig enough. Based on this report (obtained from BizNews Databank), the increase in the LDP toll rates would essentially reflect a RM 0.10 increase based on the initial intended toll of RM 1.50, which was slashed 33% (to the current RM 1.00) in 1999, for which, the Government would compensate Litrak (who own and operate the LDP under a 33 year concession agreement) RM 85 million per annum.

The agreement of the reduced toll rate, incidentally, ends Dec 31, 2006.

Litrak's corporate information, including the latest financial report, is available here. Walski has not had the time to go through the latest report in detail, but a cursory glance does indicate that they are well in the black.

According to the same Bernama report, despite the toll rate increase, the Malaysian Government would still have to fork out a total of RM 2.5 billion in compensation.

"Even with the increase, we have to pay so much in compensation. We have to compensate the reduction in the toll rates we are collecting from the public... the Government has to pay the balance.

"For LDP, for instance, the Government pays 50 sen for every car using the highway because according to the concession the new toll rate is supposed to be RM2.10 and not RM1.60 as we have announced," he said.

This, of course, stipulates that under the agreement no rate increases would have been allowed between 1999 and the present. The honest truth is that we do not know. Of course, the toll rates for LDP have pretty much remained at RM 1.00 for the last 7 years. But then again, neither has the LDP's capability to handle traffic improved much in the last 7 years.

Sounds like another round of excuses, hiding the fact that the whole concession model, at the end of the day, only benefits the highway operator, and not the road user. The LDP is a perfect example of design by political expediency, and up till today is perhaps one of the most congested highways around the Klang Valley. But Uncle Sam had this to say (from the Bernama report):

"Although we allow for toll hikes, we make sure the increase is not too high. We also pressure concessionaires to improve and upgrade facilities as localities developed and these costs are borne by toll operators.

"At the LDP, we ask the concessionaire to build four new interchanges and an overhead bridge. They have built the facilities, so we can't complain much. They are doing their job," he said.

Perhaps, they have. But Uncle Sam doesn't have to put up with the massive traffic jams day in, day out now, does he? And on top of that, as if adding insult to injury, having to pay to enjoy the jam!