Malaysian Resources Corp Bhd (MRCB) hopes the government will take over the 8.1km Eastern Dispersal Link (EDL) in Johor and its debt as soon as possible, as the highway is eating into the group's profitability.
"We will also be seeking compensation from the government. In the meantime, we will focus on existing projects and other ventures," a company official told Business Times.
MRCB, a property and infrastructure developer, reported a 71.32 per cent fall in net profit to RM5.2 million in the second quarter ended June 30 2012, from RM17.98 million in the previous corresponding period.
This is attributed to non-recognition of revenue from the EDL due to non-tolling issues.
The EDL, which opened on April 1, became a hot topic after it was announced that road users to and from Singapore face a RM15.30 toll.
The RM1.4 billion expressway links the Customs Immigration and Quarantine Complex (CIQ) and the North-South Expressway via the Pandan Interchange in Johor Baru. MRCB was awarded the project under a 30-year concession.
The concession agreement stated clearly that toll collection will be at the CIQ and start in May, which will then allow MRCB to meet its debt repayment obligations.
As at December 31 2011, MRCB had senior and junior sukuk amounting to RM1.06 billion, which were secured by the EDL project and repayable in a series of yearly redemption commencing in 2018.
MRCB is required to service the finance costs - to the tune of RM7 million a month - despite no toll charges for the EDL.
It is learnt that MRCB has accumulated some RM40 million start-up losses for the EDL when it opened in April.
At the company's shareholders meeting in April, MRCB chairman Tan Sri Azlan Zainol expressed hope that the government will consider buying the EDL at market value.
"We hope that there will be a win-win situation for the government, the people and MRCB shareholders. We do not know the market value but the total project cost was RM1.4 billion," Azlan said.
MRCB has been negotiating with the government since May for some form of compensation to cushion the operating costs as well as the possibility of agreeing in-principle to take over the expressway.
On Thursday, Minister in the Prime Minister's Department Tan Sri Nor Mohamed Yakcop said the government will acquire the EDL from MRCB to settle issues related to policy and toll charges.
He said the cost and terms are expected to be known before the end of the year
By Business Times