PETALING JAYA: With the ball now in its court, Pengurusan Aset Air Bhd (PAAB) plans to make an offer it deems “more palatable” to Selangor’s water concessionaires next week, said chief executive officer Ahmad Faizal Abdul Rahman.
The water players, he said, would be given two weeks to revert.
“There is not much room for negotiation. We have based our offer on the results of the due diligence and the balance sheet. There is only so much one can negotiate on the difference in the interpretation of these figures.
“We will address the main concerns of the concessionnaires and the offer would be fair to all parties in the context or spirit of the WSIA (Water Services Industry Act 2006).
“We will take care of their liabilities and they will continue to operate although they will now be governed by the regulator (National Water Services Commission),” he said in an interview with StarBiz.
“The offer is palatable. I believe they will take it up.”
After over a year of heated negotiations led by the Selangor government with the water players which merely resulted in a deadlock, the state government finally gave up its bid in late November and asked PAAB to intervene.
There is wide expectation with PAAB leading the talks, there will soon be a resolution to the protracted talks that have significantly delayed the water restructuring plans in Selangor.
Faizal said the new offer would “more or less” be the same as the state’s offer which had valued the water-related assets at about RM9.2bil or one time book value.
“The numbers may be more or less the same but our approach is different. For example, certain things that were previously not recognised as assets, we will now do so in our offer. The approach is to relieve them of the debt-servicing burden while they can keep their business. So, the thinking will be different.
“The idea is not to touch the business yet. We will just take over the assets,” he said.
PAAB, fully owned by the Minister of Finance Inc, had earlier planned to make an offer this week but certain issues needed to be ironed out.
“We had presented the offer to the Government which had some (points for) clarification and issues. We have also sent the due diligence report to the Selangor government and probably need to bounce some issues with them as well,” he said on the reason for the short delay.
The Selangor water sector restructuring exercise, which includes buying over water assets, is part of a national initiative to regulate the water services industry for Peninsular Malaysia and Labuan under the WSIA.
This (taking over of assets) will make concessionaires “asset-light” companies and enable them to concentrate on their core activity of treating and supplying clean water to consumers while being relieved of high cost of borrowings to maintain water infrastructure such as dams and treatment plants.
The water assets in Selangor are parked under concessionaires Puncak Niaga (M) Sdn Bhd (PNSB) and Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) — both of which are controlled by Puncak Niaga Holdings Bhd — as well as Syarikat Pengeluar Air Sungai Selangor Bhd (Splash) and Konsortium Abass Sdn Bhd (Abass).
Abass is 55% controlled by Kumpulan Perangsang Selangor Bhd (KPS) while Splash is a 40%-owned associate of Gamuda Bhd.
The Selangor government’s investment arm, Kumpulan Darul Ehsan Bhd (KDEB), meanwhile has 30% in Syabas and Puncak Niaga holds the remaining 70%.
To recap, the Selangor government via KDEB, had offered in February to acquire PNSB and Syabas for RM3.12bil, Abass for RM525.67mil and Splash at RM2.06bil in an effort to consolidate the assets but the offers were rejected by all four concessionaires as being too low.
In June, KDEB raised the offer price for PNSB and Syabas to RM5.297bil, Abass to RM1.892bil and Splash to RM2.975bil but it was rejected by both PNSB and Syabas, aborting the entire offer.
PAAB is now expected to step in to break the stalemate.
“To the public, it looks like the offer is coming either from the Selangor government or the Federal Government or PAAB. But actually, there’s only one offer.
“We have a committee with representatives from PAAB, the Federal Government, Selangor government and so forth. Everything that is carried out by the Selangor government had been endorsed by this commitee.
“The difference is if before this, the Selangor government was leading the negotations, now we, PAAB, are doing so,” said Faizal.
In a short response to a StarBiz query, Energy, Green Technology and Water Minister Datuk Peter Chin said he had given his officers until end-March 2010 to complete the entire water restructuring exercise.
So far, PAAB has bought water assets from Malacca, Negri Sembilan and Johor, which means there are nine more states to go.
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