ERL’s Service Concession Extended By 30 Years

Following seven years of negotiations since 2017, the government has extended the concession period with Express Rail Link Sdn Bhd by an additional 30 years, to 2059, according to Transport Minister Anthony Loke Siew Fook.

“This is the only extension of the concession. When the previous government talked about it in 2017, it was just the beginning of the negotiations. It has taken seven years to conclude,” Loke told Bernama. Additionally, according to Loke, the private sector operator will have more assurance to invest in infrastructure if the concession agreement is signed early.

“If there is no confirmation whether the concession is continued or not, it is certain that they will not invest. No company will vest if they do not know whether the concession continues (after 2029).

“We provide this confirmation much earlier. Now, it is only 2024. The concession only ends in five years. But we have given the commitment to signing the supplementary concession agreement, so that they can plan to invest in their assets,” he said. 

The agreement includes a profit-sharing mechanism in addition to an extension of the concession period. According to Noormah Mohd Noor, chief executive officer of ERL, the government will receive 30% of the company's earnings once the shareholders' internal rate of return (IRR) surpasses a 10% threshold.

“There is a mechanism in the concession agreement, whereby if the shareholders' IRR goes above 10%, then there will be a sharing of the profit between the government and ERL, which is 70:30,” she said.
The parties reached a supplemental agreement on Tuesday that will enable ERL to move from a fixed fare structure that needs approval from the government for each increase to a "market-driven" fare structure.

The government will no longer be reimbursed for ERL fees or charges resulting from the collection of passenger service charges (PSCs) as of 2029, per the terms of the new agreement.

When asked about the amount of compensation still owed to ERL that hasn't been settled, Loke said he couldn't comment because the Ministry of Finance is the only one who is aware of the most recent figure.