No More Compensation To ERL From 2029 If Government Rejects Fare Hikes - MOT

Datuk Hasbi Habibollah, the deputy minister of transport, stated that the government is not required to provide compensation if it decides not to approve fare increases due to the market-driven fare structure that was placed on Express Rail Link Sdn Bhd (ERL) in its 30-year concession extension.

"ERL may impose market-driven fares that are advantageous to the general 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.

In order to mitigate the risk for ERL, whose concession for KLIA Express and KLIA Transit was extended from 2029 to 2059, Hasbi did not go into detail about how the mechanism operates.

As for the extension, once the shareholders' internal rate of return (IRR) surpasses the 10% threshold, the government will be entitled to thirty percent of ERL's earnings.

Beginning in 2029, the government will also no longer pay ERL fees or charges derived from the collection of passenger service charges (PSCs). For every outgoing domestic passenger and every outgoing international passenger, the PSC cut for ERL is currently RM1.

The single trip fare was last increased to RM55 in 2015, but according to ERL's original fare schedule, it should have reached RM126 by now.

The government's subsequent payment to ERL for the postponed fare adjustment is not open to the public. In 2019 and 2023, KLIA Express and KLIA Transit transported over 8.8 million passengers and 6.58 million passengers, respectively.