Don't politicise water issue, state govt told

New Straits Times, 4 March 2009

KUALA LUMPUR: The Selangor government has been told not to politicise the Federal Government's plan to restructure water assets in the state but instead to put the interests of consumers first.

Energy, Water and Communications Minister Datuk Shaziman Abu Mansor said the state government should not use the water issue for political gain because "at the end of the day, providing cheaper water for consumers is what matters".

"The problem is only with the Selangor government. The Pakatan Rakyat governments in Kelantan and Kedah want us to speed up acquisitions so that people can get water at a reasonable rate," he said at a media briefing yesterday on the restructuring of the water service industry in Selangor.

Early this year, the Selangor government formed a panel to review the restructuring of the water service industry in the state and for the Federal Government's plan to acquire water assets in the state.


The panel had on four occasions postponed its meeting with representatives of the ministry, Pengurusan Aset Air Bhd (PAAB) and the National Water Services Commission (Span). The last postponement was on Feb 14.

The meeting was to have ironed out details of the restructuring, including negotiations to take over the state assets in the industry, namely piping systems and 27 treatment plants worth about RM9 billion.

PAAB has now moved in to negotiate directly with the four water concessionaires in the state -- Puncak Niaga (M) Sdn Bhd, Syarikat Air Selangor Sdn Bhd (Splash), Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) and Konsortium ABASS Sdn Bhd (Abass).

Puncak Niaga and Splash own a water treatment plant each in the state.

Under the initial restructuring plan, the Selangor government, via state-controlled Kumpulan Darul Ehsan Bhd (KDEB), would take over the concessions and assets to be handed over to PAAB, a wholly-owned company under the Ministry of Finance Inc.



The assets would then be leased back to KDEB as the sole licensed operator. This is because after the restructuring, there would no longer be concessionaires. Instead, licence will be issued to the operator which would be reviewed by the Federal Government every few years.

On Feb 20, the four concessionaires rejected an offer by the Selangor government to take over their assets and concessions for RM5.7 billion (RM1.1 billion for concessions and RM4.6 billion for assets).

Among the reasons cited in a news report was that the offer was lower than expected.

The Energy, Water and Communications Ministry had set March 31 as the deadline for the deal to be finalised.

Shariman questioned the need for KDEB to take over the concessions and assets and then hand them back to PAAB.

He said the PAAB offer did not compete with the state government's offer to the concessionaires as it involved only the assets portion, which the Selangor government had agreed to sell to PAAB at its acquisition price.





"PAAB's offer would be based on principles of fairness, transparency and affordability to protect consumer interests. The value to be determined will be based on established accounting principles and financial practices and to be carried out by an independent auditor appointed by PAAB."

Shariman said he would not invoke the Water Service Industry Act 2006 to pressure the concessionaires to accept the state government's offer.

The Federal Government not only had to consider the interests of consumers but also that of bondholders and lenders who had invested in the water industry as well as shareholders of water operators, he added. -- Bernama