WCE has enough funds to complete WCE
The Banting-Taiping highway has experienced cost increase, with land acquisition again a major contributor
05-Jul-2023 | by HAJAR UMIRA MD ZAKI | The Malaysian Reserve
WCE Holdings Bhd has secured enough funding to complete the West-Coast Expressway that connects Banting to Taiping, expected to be completed by the end of 2024 after experiencing delays mainly due to land acquisition issues.
The highway, running through the states of Selangor and Perak, has also experienced cost increase, with land acquisition again featuring as a major contributor.
“As of now, we have the required funding to complete the job,” WCE Holdings CEO Lyndon Alfred Felix told The Malaysian Reserve (TMR) in an interview last week.
Aside from the highway construction, WCE also has an agreement with PNB Development Sdn Bhd, a subsidiary of Permodalan Nasional Bhd (PNB), for another construction project in Banting.
PNB Development is the master developer of the Kota Seri Langat township in Banting, Selangor. It plans to build an interchange from the township to the WCE.
“They want access to our highway. So, we are building an inter-change for them. We are also involved in the construction works,” he said.
After the signing of the WCE concession agreement in 2013, construction began in 2014 and was supposed to have been completed in 2019. However, the project faced a number of challenges, including delays in land acquisition and a change of alignment of Section 7 of the project in Tanjung Karang, Selangor.
The Tanjung Karang alignment was initially established in the concession agreement. However, there was a proposal from the government to try to explore another alternate alignment. The finalisation of the alignment took another three years.
“So, for three years, we were also stuck…Section 7 will [now] be completed by next year,” he said.
The initial cost of the WCE was RM5.9 billion, calculated a decade ago. Back then, WCE had received funding aids from the government to the tune of RM2.2 billion, a RM1.5 billion syndicated loan and raised a RM1 billion sukuk. The remainder RM1.2 billion of the project financing came from the company itself.
Felix said the land acquisition cost went up to RM2.2 billion from an earlier estimated RM1 billion, adding that it was beyond the company’s control as it was handled by the federal and the state governments.
HesaidWCEisnowina comfortable position when it comes to funding issues, including with the cash injection from a recent corporate exercise involving the sale of its 40% stake in Radiant Pillar Sdn Bhd to IJM Properties Sdn Bhd for RM494 million.
The disposal enabled the group to realise and unlock the value of its investment in Radiant Pillar, giving rise to a pro forma gain on disposal of close to RM245.67 million, according to filings to the local stock exchange. The bulk of cash proceeds from the disposal has been earmarked for WCE project, allowing the group to save on financing costs should similarly amount of funds be sourced
from other modes of financing or borrowings.
The completion of the disposal and construction of the WCE project, which is the group’s core business, turns WCE into a pureplay expressway operator listed on Bursa Malaysia. Radiant Pillar Sdn Bhd is the developer of Bandar Rimbayu township that was launched in 2013 in Kuala Langat, Selangor.
Asked the rationale behind the move, Felix said it allowed the company to raise funds required to complete the job at hand.
West Coast Expressway Sdn Bhd (WCESB) is the highway concessionaire for the West Coast Expressway (Taiping-Banting). The total distance of the WCE from Taiping to Banting under the scope of privatisation is 233km covering 93.8km in Selangor and 139.2km in Perak.
The expressway is now heading to full completion by the end of 2024. Felix said it is 86% completed with four sections — Section 5, Section 8, Section 9 and Section 10 — is already up and running. Four more sections are expected to be open to road users this year.
The WCE under the scope of privatisation includes 12 sections as follows: Banting-South Klang Valley Expressway (SKVE), SKVE-Shah Alam Expressway (SAE), SAE-Federal Highway Route 2 (FHR2)/New Klang Valley Expressway (NKVE), FHR2/NKVE-Bandar Bukit Raja Selatan, Bandar Bukit Raja Selatan-Bandar Bukit Raja Utara (opened on Dec 10, 2019), Bandar Bukit Raja Utara-Assam Jawa, Assam Jawa-Tanjung Karang, Hutan Melintang-Teluk Intan (opened on May 31, 2019), Kampung Lekir-Changkat Chermin (opened on on Sept 23, 2019), Changkat Chermin-Beruas (opened on Sept 23, 2019), Beruas-Taiping South and Changkat Keruing-Seputih. The last, designated as Section 12, is a deferred alignment where construction is to be carried out subject to compliance in the concession agreement (CA).
Felix said they have received some good news on the user traffic. Over the last year, traffic was up 60% with only the four sections opened.
“Our average road users for last year was approximately around 35,000 daily. During the peak season, for example during festive seasons, we recorded 60,000 users during Hari Raya Aidilfitri last year. During this year’s Hari Raya, we set a record as we hit 100,000.
“So, that was quite comforting because in a year’s time, the traffic has increased by 60% with only four sections open. One of the main reasons was because of the congestion in PLUS. It’s almost at breaking point. So, almost all traffic has to flow to WCE.
“That’s why we are quite confident that once we open the four sections this year, you will see the flow particularly because Section 11 is connected to PLUS,” he said.
Felix said they estimate 300,000 daily road users once the expressway is fully completed next year.