By Chan Quan Min
Owners of the highway concessionaire for the proposed Kinrara–Damansara Expressway (Kidex) want to muscle in on the lucrative north-south traffic served by the congested Lebuhraya Damansara–Puchong (LDP) highway.
The 14.9 km fully elevated Kidex highway is estimated to cost between RM2.2 billion to RM2.4 billion, Malaysia’s most expensive on a per kilometre basis.
Kidex Sdn Bhd, the highway concessionaire, is positioning Kidex as an alternative to the LDP for a share of the LDP’s enviable pre-tax profit margin of 43% (five-year average).
Tracing, for the most part, the same north-south alignment as the LDP through some of the Petaling Jaya’s most densely populated areas, the concessionaire projects a reduction in traffic volume “by between 15% and 30%” on alternative routes.
In an interview with radio station BFM yesterday, Kidex Sdn Bhd CEO Mohd Nor Idrus acknowledged the Kidex alignment “is almost parallel and is supposed to complement the LDP.”
“When the LDP is full or choked… (motorists) will start looking into alternatives,” there are GPS systems where “you punch in the route and they show you the shortcuts. It may go in front of your house,” he explained.
“To me the need (for Kidex) is real,” Mohd Nor Idrus confidently told BFM, perhaps eyeing a share of the 497,000 vehicles that use the LDP in a given weekday along with the bumper profits the LDP concession holder rakes in year after year.
A cash cow
Lingkaran Trans Kota Holdings Bhd (Litrak) is the concession holder of the LDP and 50% owner of the Sprint Highway concessionaire.
For the 2013 financial year Litrak turned in pre-tax profit of RM179.5 million on the back of revenue of RM369.3 million. Toll collections of RM364.2 million accounted for practically all of the company’s revenue and dwarfed finance costs of RM89.1 million.
A quick calculation reveals a pre-tax profit margin of 49% for the 2013 financial year, a figure likely to increase for 2014 with RM89 million paid out to Litrak as compensation for not raising toll rates this year, according to a parliamentary reply.
A November 2013 Public Bank report valued the LDP at RM1.93 billion, based on discounted equity cash flows until the end of concession period in 2031. The LDP was completed in 1999 at a price tag of RM1.33 billion.
80:20 debt to equity financing split
Kidex CEO Mohd Nor Idrus told business weekly Focus Malaysia he would seek to part fund the highway project through equity on the basis of an 80:20 debt to equity financing split.
Majority shareholder Emrail Sdn Bhd has plans to inject assets related to the highway project into a PN-16 company Premier Nalfin Bhd by way of a reverse takeover listing.
The two shareholders of Kidex are Emrail with a 70% stake and Zabima Engineering Construction Sdn Bhd with the remaining 30%.
Emrail has been linked to former Chief Justice Zaki Azmi through his wife’s directorship. UMNO legal advisor Mohd Hafarizam Harun is a director in both Emrail and Zabima Engineering.
When Kidex was awarded the contract in early-2012 by the federal government, Pakatan Rakyat leaders claimed the concession agreement was a ‘reward’ to Zaki and Hafarizam for their work during the Perak constitutional crisis of 2009.
Both Zaki and Hafarizam have vehemently denied such allegations.
Meanwhile, Mohd Nor Idrus has gone on record to say there was one bidder for the highway concession. “I believe we won by merit,” he told BFM.
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