Cabinet to decide Wed on water tariff hike

New Straits Times, March 31, 2009

By YEOW POOI LING

Minister will present Syabas proposal on hike to Cabinet

PETALING JAYA: The Cabinet will decide tomorrow whether the water distributor concessionaire in Selangor and Federal Territory of Kuala Lumpur can raise water tariff by as much as 31% on the same day as provided for in the concession agreements.

Energy, Water and Communications Minister Datuk Shaziman Abu Mansor said he would be presenting a proposal to the Cabinet on Syarikat Berkalan Air Sdn Bhd’s (Syabas) request for the tariff increase.

“The ministry has to present its opinion to the Cabinet on the proposed tariff hike and the quantum of increase that should be given to the concessionaire. The Cabinet will then decide,” Shaziman said after launching the France Asia Trade Forum yesterday.

This is despite the fact that the minister himself has the powers to either delay or give the nod for the tariff hike. Under section 114 of the Water Services Industry Act 2006 (WSIA2006), the minister is empowered to decide on water issues based on national interest.
Datuk Shaziman Abu Mansor showing the booklet

The original date for the increase in water rates was Jan 1 but this was postponed to April upon the state’s request pending negotiations over sale of water assets in Selangor to the Government under the national water restructuring exercise.

At the same function, the minister issued a booklet that stated the distribution of water for Selangor after the takeover of water assets by national water asset company Pengurusan Aset Air Bhd (PAAB) would remain status quo, with Syabas given a licensing from the regulator.

The other three water concessionaires – Puncak Niaga Sdn Bhd (PNSB), Syarikat Pengeluar Air Selangor Sdn Bhd (Splash) and Konsortium Abass Sdn Bhd – would be allowed to operate on authorisation basis.

The respective water operators for Malacca, Negri Sembilan and Johor also maintained their operations after PAAB took over their assets.

The Selangor government has till today to finalise the consolidation of the state’s water sector.

But it is unlikely to make any headway as the four concessionaries have not taken up its offer. Selangor had earlier offered RM4.6bil for the assets and RM1.1bil for the concessions.

PAAB is now in negotiations directly with the concessionaires in Selangor.

Shaziman said the federal government would not “force” the state to migrate to the new regime.

“If the state is unwilling, it would have to comply with the terms in the agreement signed between the federal, state and the concessionaires, which included the tariff increase,” he said.

Should the tariff increase be rejected by the state, it would have to bear the compensation cost as stipulated in the agreement, he added.

It was estimated that the compensation could amount to RM38mil a month.

Shaziman said the ministry was still open to work with the state to resolve the present issue.

“In fact, there is a proposal from the state on the matter and we have asked them to send a team to provide further details. If the proposal is beneficial to the people, we will accept it.

“So far, we have not received any response from the state,” he added.

Selangor Water Review Panel member Tony Pua told StarBiz that the state’s proposal remained similar with the past, which was to seek approval to lead the negotiation with the concessionaires pertaining to the water restructuring.

He said the potential tariff increase was questionable given that audit reports had revealed that Syabas failed to comply with several concession terms, including awarding contracts via open tender.

“Why keep the service provider when it has a poor track record in the last four years and broken some terms in the past?” Pua said.