jump to navigation

Selangor ready with offers for water players February 13, 2009

Posted by elizabethwong in Current Affairs, Economy, Malaysia.
Tags: , , , ,

By Yong Min Wei, The Edge Daily

In a move to prevent a tariff hike and takeover of water assets by the federal government, the Selangor state government is ready to make formal takeover offers to the four water concessionaires in the state.

According to a statement yesterday, the state executive council (exco) has agreed to issue an offer letter within two days to the four concessionaires — Konsortium ABASS Sdn Bhd, Puncak Niaga (M) Sdn Bhd, Syarikat Pengeluar Air Selangor Holdings Bhd (Splash) and Syarikat Bekalan Air Selangor (Syabas).

Puncak Niaga and Syabas are controlled by Puncak Niaga Holdings Bhd which is listed. ABASS is controlled by Kumpulan Perangsang Selangor Bhd (KPS) while Gamuda is among the shareholders of Splash.

The state government came up with the valuation six months after embarking on a study of a restructuring scheme of all water assets in the state.

“It must be emphasised that the state government, through a special panel formed to study the restructuring process for the Selangor water industry, has made a detailed study into the valuation of all the assets and equities of the companies concerned,” said the statement issued by the media secretariat of the Menteri Besar’s Office.

“The state government feels that the offer to be made to all the concessionaires is fair and took into account the interest of all parties. No party would lose out from the offer. In fact, the profit rate given to the concessionaires is quite reasonable,” the statement added.

The state government said it wanted to ensure that the restructuring exercise would be smoothly implemented with the aim of bringing maximum benefit to its citizens.

“The main priority is to make the best decision in the name of public interest,” the state government pointed out.

It hoped that all parties would agree to the offer so that their restructuring process could be implemented before March 31, as ordered by the Ministry of Energy, Water and Communications.

It also said everyone’s cooperation could help prevent a water tariff hike which would surely be a burden to the public, especially during this time of economic hardship.

Last week, Menteri Besar Tan Sri Abdul Khalid Ibrahim confirmed that he had asked Energy, Water and Communications Minister Datuk Shahziman Abu Mansor to terminate Syabas’ 30-year Selangor water concession agreement as the water distributor had allegedly violated the terms of the concession agreement.

The agreement, from Jan 1, 2005 to Dec 31, 2034, was signed between the federal government, the Selangor government and Syabas. Puncak Niaga has 70% equity in Syabas while the remaining 30% is held by Kumpulan Darul Ehsan Bhd (KDEB).

In an earlier report, Shahziman said the Selangor water service assets were worth RM5.5 billion and included main pipes, water treatment plants and water catchment areas. The assets belonged to the Selangor government and the four water concessionaires concerned, he said.

The minister noted that consumers in Selangor risked paying 37% higher water tariff should the state government fail to hand over its water service assets to Pengurusan Aset Air Bhd (PAAB) by March.

According to the plan, PAAB would take over the assets and lease them back to the concessionaires who would operate the assets.

The handing over by Selangor to PAAB, which is under the Finance Ministry, was aimed at reducing the financial burden of water management in Selangor, which also supplies water to Kuala Lumpur and Putrajaya.

As the restructuring of the water assets involves the people, the statement said that the Mentri Besar’s office would hold a briefing for the public so that they understand the issues at hand which required detailed analyses.