Husni now says IWK to merge with government unit

Malaysian Insider, 10 September 2011

IPOH, Sept 10 — Putrajaya will merge national sewerage company, Indah Water Konsortium, (IWK) with a government unit, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said today, confirming a report by The Malaysian Insider.

Ahmad Husni said the decision was made recently by the National Economic Council.

“The move is an effort to strengthen both entities which are owned by the government. The biggest asset owned by IWK can be redeveloped to benefit the merged entity,” he told reporters after distributing Jalur Gemilang flags to Chemor residents here.

Saying that the merger process had begun, Ahmad Husni, however, declined to disclose the name of the government subsidiary, except to say that IWK would continue to be government-owned after the merger.
IWK is currently wholly-owned by the Ministry of Finance Incorporated.

The Malaysian Insider reported on Thursday that IWK would be privatised into a consortium led by strategic investment agency 1MDB, some 11 years after the government was forced to bail out the national sewerage company from financial difficulties under its previous owners.

Finance Ministry sources told The Malaysian Insider that the 1MDB-led consortium will include water distribution company Puncak Niaga, and that the deal has been given the nod by the Economic Council chaired by Prime Minister Datuk Seri Najib Razak.

However, it is understood that some ministry officials are still scrutinising the deal amidst concerns about its feasibility and worries over whether the government could once again be forced to bail out the company if the latest plan fails.

Under the proposed deal, the 1MDB consortium will acquire IWK for RM1 and take over its debts which include more than RM1.5 billion in loans still owed to the ministry.

The consortium is seeking a 60-year concession from the government and will only pay back the principal amount and interest on the loan over the long term.