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PLUS over-paying for maintenance, says Maju Holdings boss

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In justifying proposal to take over highway operator, Abu Sahid Mohamad says reducing leakages will contribute to savings that allows for freeze on toll hikes.

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PETALING JAYA: Abu Sahid Mohamad, the group executive chairman of Maju Holdings Sdn Bhd, has accused PLUS Malaysia Bhd of having leakages and wastage that is affecting the highway operator’s bottom line.

As an example, Abu Sahid said Maju, which operates the Maju Expressway connecting Kuala Lumpur with Putrajaya and Cyberjaya, pays three times less than what PLUS pays for the resurfacing of roads.

“I pay RM18 to resurface one square metre of my highway (Maju Expressway), everyone pays about that. But PLUS pays about three times more,” he told The Edge, adding that PLUS pays RM58 for resurfacing one square metre.

According to Abu Sahid, the lower costs on such expenses and the plugging of other leakages could see PLUS generate enough savings that would negate any freeze on toll hikes, as he has also proposed in an offer to take over PLUS.

Last month, Maju said it sent a letter of intent to UEM Group Bhd and the Employees Provident Fund (EPF), the two main shareholders of PLUS with 51% and 49%, respectively.

“Yes, Maju can confirm that we have submitted a formal bid via our financial advisers to UEM and EPF, to acquire 100% of PLUS and its subsidiaries,” the company was reported to have said.

One of the key points Maju made in its proposal was to freeze toll hikes for 20 years.

Aside from the freeze on any toll increases, Maju said it was also willing to forego the compensation amounting to about RM900 million from the government due to toll hikes not implemented previously.

Another argument put forward by Abu Sahid in justifying the proposal to buy PLUS is that neither shareholder – UEM or EPF – has done anything to optimise the use of the land along the highways it operates.

“When the government asks you to build a highway, you don’t just build a highway, you have to develop all the property around it. Look at Australia, look at America.

“UEM has not done this. Why haven’t they? You have 1,000km, you can build a haulage warehouse in the middle, you can build a distribution network, but they (UEM and EPF) don’t think like businessmen.

“There’s a lot that can be done with this highway. You can build so many things. These people don’t even have an idea of how to do it,” he was quoted as saying.

He added that he owns pieces of land scattered along the PLUS highway, and that by owning the highway, he could develop the parcels.

“If I didn’t have land, I wouldn’t buy the highway. In Johor alone, I have more than 1,000 acres. I have lots of land, in many places.

“Even with a few parcels, we can build a township. You can add value, the country will prosper,” he told The Edge.

Reducing maintenance cost

Justifying his claim on the reduced costs of maintenance for the highways operated by PLUS, Abu Sahid said his and Maju’s shareholding in Ipmuda Bhd, which supplies building materials and finishing products to the construction industry, would work towards their advantage.

“We have 12,000 customers (via Ipmuda) who are contractors – those who do roadworks, carpenters, masons, you name it. They are our customers throughout the country — not just in Kuala Lumpur but throughout Malaysia, from Bukit Kayu Hitam to Johor Baru.

“We talk to them, so when we look at PLUS’ pricing, it’s far, far above market price.

“Why do they pay that price? Not because they are stupid but because they have layers and layers and layers, from PLUS, they give it to Propel (Projek Penyelenggaraan Lebuhraya Bhd), then to UEM Edgenta (Bhd), so many other companies (all within the UEM and Khazanah stable). By the time it goes to the guy who really does the job, there is just skin,” Abu Sahid told The Edge.

He added that PLUS are using the same contractors that service the Maju Expressway.

“It’s the same people that do the job, be it the slopes, roadworks, landscaping … it’s the same people.”

According to The Edge, UEM did not wish to comment on the allegations by Abu Sahid.

This is not the first time that the Maju boss has brought up the “irrattionally high” operating expenditure in PLUS.

Meanwhile, addressing the two shareholders – UEM and EPF – Abu Sahid said the offer he has made is fair.

“The best thing for UEM and EPF to do is to sell PLUS. I’m offering to pay them RM4 billion in hard cash, that is whatever they have invested.

“If they say it’s not enough, how much do they want? Show me how much they make on their investments,” he was quoted as saying.

According to its website, PLUS has five concessionaires. The first is Projek Lebuhraya Utara-Selatan Bhd which operates the North-South Expressway, New Klang Valley Expressway (NKVE), Federal Highway Route 2 and Seremban-Port Dickson Highway.

The other four concessionaires are Expressway Lingkaran Tengah Sdn Bhd (which operates the North-South Expressway Central Link), Linkedua (M) Bhd (Malaysia-Singapore Second Link), Konsortium Lebuhraya Butterworth-Kulim Sdn Bhd (Butterworth-Kulim Expressway) and the Penang Bridge.

All PLUS Malaysia’s concessions end in December 2038.

It was reported in July that Abu Sahid had received the blessings at the highest levels of the government to make his move to take over PLUS.

Report: Maju’s bid for PLUS could create more contestable market

Maju’s bid for PLUS may see toll rate freeze for 20 years

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