West Coast Expressway (WCE), the Kumpulan Europlus subsidiary, has secured approval from the Malaysian Government to build a 316km highway on the western coast of the country at an estimated cost of MYR7.07bn ($2.3bn).

The planned road will stretch from Banting in Selangor to Taiping in Perak and will be carried out in build-operate-transfer (BOT) basis with a concession period of 60 years. Of the total distance, 224km will be tolled, while the remaining 92km will be toll-free.

In a bid to enhance the viability of the project, the government has agreed to provide a loan of MYR2.24bn ($736.9m) for the project, and it will also fund the land acquisition cost of MYR980m ($322m). The loan will be extended starting from 2013 at an interest rate of 4% a year; and an interest subsidy of up to 3% from commercial loans for a period of 22 years.

Europlus noted its 64.2% owned WCE will deliver the project through open tender and the work will be carried out in two phases. The first phase involves the stretch between Tanjung Karang and Banting, while the second phase spans from Taiping to Sabak Bernam.

The section between Sabak Bernam and Tanjung Karang will be on the existing part of Federal route, which will be upgraded as part of the project.

West Coast Expressway will have a closed toll system, like the North-South Expressway, and is scheduled to be complete by 2013. Under the concession agreement between WCE and the Malaysian Ministry of Finance, toll revenue in excess of an agreed traffic volume will be shared on the basis of 70:30 between the government and West Coast until the complete loan settlement and subsequently 30:70 after the settlement of the loan.

A formal concession deal will be signed between WCE and the Works Ministry of Malaysia after clearance of the deal from the attorney general.