West Coast Expressway (WCESB), an 80%-owned subsidiary of Malaysian investment holding company Kumpulan Europlus (KEuro), has entered into a concession agreement with the Government of Malaysia (GOM) for the construction of the West Coast Expressway project worth MYR7.7bn ($2.53bn).

The West Coast Expressway project covers the construction of a 316km-long highway connecting Banting in Selangor and Taiping in Perak.

It involves 233km of toll highway as well as a 40km stretch that will be constructed later.

Earlier, KEuro announced that the project will be executed under build-operate-transfer basis, and had a concession period of 60 years.

"The West Coast Expressway project covers the construction of a 316km-long highway connecting Banting in Selangor and Taiping in Perak."

The new concession agreement, that includes the final terms of the concession, follows the state’s approval to WCESB, allowing the company to carry out the privatisation of the expressway.

KEuro’s subsidiary will receive a government support loan (GSL) of MYR2.24bn ($739m) at an interest rate of 4% per year, which will commence this year.

According to the Malaysian firm, the toll revenue over the agreed traffic volume will distributed on 70:30 basis between the state and WCESB until the settlement of the loan.

Following the settlement of the GSL, the excess revenue will be shared on 30:70 basis between the two parties.

The concession agreement entitles WCESB to a subsidy of nearly 3% on interest for more than two decades from commercial loans.

In addition, the government will fund the land acquisition cost of about MYR980m ($323.32m) for the highway development.

WCESB is a joint venture of between KEuro and IJM which owns 20% interest in the company; IJM also holds nearly 23% associate stake in KEuro.