COMMENT | It does not mean that if a not-for-profit company is taking over four key toll roads in Kuala Lumpur that there are no risks and concerns - there are some major ones and if things go wrong, it is the government which will be responsible anyway.

There are serious issues of valuation which have to be addressed which could put the entire proposal at risk, such as traffic reductions in the light of increased use of public transport systems, time to expiry of concessions, etc, as we shall see.

Non-profit Amanat Lebuhraya Rakyat Bhd, or ALR, is taking over four toll roads in KL for RM5.48 billion comprising RM1.03 billion equity and debt of RM4.43 billion. If they take over debt, then the initial cash portion is RM1.03 billion for equity.

If they can refinance at a lower rate, they will. Estimated savings for the government is RM4.3 billion in compensations no longer needed for not raising toll rates for the life of the concession. It may involve the possible extension of toll by 5-10 years for roads, but for the one tunnel, there may be a shortening of the concession period.

ALR is in the process of acquiring concession companies...