PAAB starts talks with Selangor concessionaires

STAR, 19 February 2009

By YEOW POOI LING

KUALA LUMPUR: Pengurusan Aset Air Bhd (PAAB) has “moved in” to negotiate directly with the water concessionaires in Selangor to take over their assets as part of the initiative to restructure water services in the country.

According to National Water Services Commission (SPAN) chief executive officer Datuk Teo Yen Hua, the Selangor government had failed to meet the deadline given by the Federal Government although it had been extended twice after the first deadline of end September last year.

“The Federal Government had then given the state government until Feb 14 to submit an offer for the takeover of the water assets and equities, but up to today, there has been no response,” he told a press conference yesterday.

“It’s been too long and time is of essence. It’s only appropriate for PAAB to move in and resolve the issue,” he added.

Teo said there was no offer on the table yet for the water assets as PAAB had only started “looking at the books.”

Under the initial restructuring plan, the Selangor government, via its investment arm Kumpulan Darul Ehsan Bhd (KDEB), would consolidate the concessions, following which it would hand over the water assets to PAAB.

The assets would then be leased back to KDEB as the sole concessionaire. The Ministry of Energy, Water and Communications has ordered the restructuring to be completed by end March.

Should the state government fail to hand over the water assets to PAAB by then, consumers would risk paying water tariff that is 37% higher.

However, only last Friday, did Kumpulan Perangsang Selangor Bhd (KPS), which is the subsidiary of KDEB, initiate the move to restructure via an offer for some RM6bil for the four water concessions.

Puncak Niaga Holdings Bhd was offered RM3.1bil for its water assets and operations as well as those of its 70% sub-subsidiary Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) without assuming any liabilities.

Gamuda Bhd’s 40% own unit, Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash), was offered RM2.1bil without liabilities while KPS’ own Konsortium Abass Sdn Bhd was offered RM525.7mil.

The concessionaires have until tomorrow to respond to their respective offer but news reports so far have indicated that the offers were unattractive.

Teo said if the negotiations between PAAB and the concessionaires failed to meet the March deadline, a higher tariff would be imposed.

On the state government’s request for the Energy, Water and Communications Minister to intervene in the restructuring, Teo said it was unnecessary.

“Concessionaires have the option of either migrating to licensing or continuing the concessions based on new terms set by SPAN. We have not gone through that process. If the concessionaires refuse to come forward for renegotiations, SPAN will advise the minister accordingly,” he said.