MOT: No more compensation to ERL from 2029 if govt rejects fare hikes

Feb 27, 2024

KUALA LUMPUR (Feb 27): The market-driven fare structure imposed on Express Rail Link Sdn Bhd (ERL) in its 30-year concession extension means that the government does not have to pay compensation if it does not approve fare increases, said deputy minister of transport Datuk Hasbi Habibollah.
“ERL is allowed to impose market-driven fares which will benefit the public, the government and ERL.
“Through this method, there is no longer any compensation clause to ERL should the government not approve applications to raise fare rates,” Hasbi told Dewan Rakyat on Tuesday.
Hasbi did not elaborate on how the mechanism works to address the risk for ERL, whose concession for KLIA Express and KLIA Transit was extended from 2029 to 2059.
Meanwhile, under the extension, the government is entitled to 30% of ERL’s earnings once the shareholders’ internal rate of return (IRR) crosses the 10% threshold.
The government will also stop paying ERL fees or charges from the collection of passenger service charges (PSCs) starting 2029. The PSC cut for ERL currently stands at RM1 for each outbound domestic passenger and RM5 for each outbound international passenger.
Based on ERL’s original fare schedule, the fare for a single trip would have been raised to RM126 by this year, but it was last raised to RM55 in 2015.
The resulting compensation for the delayed fare adjustment owed by the government to ERL is not publicly available. KLIA Express and KLIA Transit carried more than 8.8 million passengers in 2019, and 6.58 million passengers in 2023.
ERL is 45%-owned by YTL Corp Bhd, followed by Lembaga Tabung Haji’s 36% stake, SIPP Rail Sdn Bhd’s 10% shareholding, and the remaining 9% interest owned by Trisilco Equity Sdn Bhd.
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Source: EdgeProp.my