KUALA LUMPUR: PLUS Expressways Bhd expects traffic volume to drop following the steep 41% hike in petrol prices but believes this is only temporary before drivers get used to the higher prices.

The toll road concessionaire is also on the lookout for new highways to build or acquire and feels that prospects for greenfield toll highways in Malaysia for the moment are limited.

"From our experience in 2005, there was an impact in 2006,'' chairman Tan Sri Mohd Sheriff Mohd Kassim told reporters after the company AGM yesterday.

Traffic volume growth seen on the expressways in 2005 was 0.8% and it rose marginally by 1.6% in 2006. Growth, however, rebounded strongly by 7.7% last year and, according to Sheriff, growth for the first four months of this year was still high.

While traffic may slow down in Malaysia, PLUS is also looking to spread its wings in markets abroad where it already has a presence.

"We are evaluating a few bids in India,'' managing director Noorizah Abd Hamid said, adding that Indonesia was another key market for the group.

PLUS has ventured to India and Indonesia to expand its toll concession business. In India, it has secured a 22km highway in Mumbai and, through a consortium, it has in Indonesia a stake in a 116km tolled highway.

India and Indonesia had over 1,000km of highways planned, Noorizah said, adding that the targeted internal rate of return for a toll highway in India was in the 'mid-teens' and, in the 'high-teens' for Indonesia.

She said the group was also evaluating some offers to acquire highways in Malaysia but declined to elaborate.

Commenting on toll increases, Sheriff said PLUS was still being compensated by the Government for the scheduled toll increase of 10% that was to have taken place this year. The revision of toll prices by 10% is to take place every three years.

On the Government's review of toll concession agreements, he said the company had not been involved in any negotiations with the Government but had been giving the relevant information when asked.

"The Government has always honoured the concession agreements and I believe it will continue to do so,'' he said.