Minister tells Selangor to go ahead with water concession takeover

Malaysian Insider, January 31, 2013

KUALA LUMPUR, Jan 31 – Selangor can buy out the water concession if the private utility companies contracted to supply it are agreeable, Datuk Seri Peter Chin Fah Kui said today, adding that the federal government will not block the deal.

“To me, this is an ordinary commercial offer which requires consent from the buyer and seller,” the energy, green technology and water minister (picture) told a news conference in Putrajaya.

“If there is an agreement, just let SPAN and myself know,” he added, referring to water company regulator, National Water Services Commission.

Selangor Mentri Besar Tan Sri Abdul Khalid Ibrahim had yesterday announced his Pakatan Rakyat (PR) government will go ahead to take over the state’s water concession within 14 days, and added he had written to Chin’s ministry to inform the latter.

But Chin said today he only knew of Selangor’s plan through news reports.

He said he would reply to the state government once he received the black-and-white.

Selangor has steadfastly opposed the federal government’s Langat 2 project, citing the high costs involved that would force the state to increase the tariffs for water and renege on its pledge to provide the utility cheaply, a policy PR had introduced after winning power in Election 2008.

To facilitate the process, Selangor had first mooted the takeover in 2009, offering to buy Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Puncak Niaga Sdn Bhd (PNSB), Syarikat Pengeluaran Air Sungai Selangor Sdn Bhd (Splash) and Konsortium ABASS at RM5.7 billion. The offer was rejected.

We are holding on to the word of Tan Sri Muhyiddin Yassin… in Sabak Bernam recently that the federal government will not stop the Selangor government from taking over the state’s water services, says Khalid Ibrahim

Last year, Khalid was reported to have increased the offer to more than RM9 billion to take over all assets and liabilities of the companies, including their bonds.

The tussle for control of treated water supply in the country’s most developed state has become major vote fodder in the run-up to Election 2013 after Syabas raised the alarm last year of a possible crisis in the near future due to near-zero reserves at the state’s water treatment plants.

In recent weeks, Selangor and Syabas again locked horns when each blamed the other for the Klang Valley water crisis.

The blame game between the private company and Khalid’s government has been going on for months and took a new turn earlier this month when the mentri besar mooted a media drive relating their version of events plus a weekly update of the water problem, alleging that the latest disruption was due to Syabas’s poor upkeep leading to faulty pumps in urban Wangsa Maju and Pudu Hulu Baru.

Syabas, in retaliation, placed full-page advertisements in several major newspapers to rebut Selangor’s claims.

The protracted battle for control of water resources Selangor has thrown a spotlight on how much money is at stake in the strategic industry and is potentially another example of Mahathir-era privatisation gone wrong.

It could also tilt the balance in the battle for both Selangor and Kuala Lumpur, depending on who voters ultimately blame for cuts to their water supply. PR parties rule Selangor and control 10 out of 11 parliamentary seats in the Federal Territory.

Selangor says to take over water concession in 14 days

Malaysian Insider

SHAH ALAM, Jan 30 — The Selangor Pakatan Rakyat (PR) government will proceed to take over the state’s water concession within 14 days, Mentri Besar Tan Sri Abdul Khalid Ibrahim said today.

“We have written to the Energy, Green Technology and Water Minister Datuk Seri Peter Chin Kah Fui to notify him that we will take over the state’s water services from the concessionaires within 14 days,” Khalid (picture) told reporters after chairing the state’s executive council meeting here. 

“We are holding on to the word of Deputy Prime Minister Tan Sri Muhyiddin Yassin, who is the chairman of the Cabinet Committee on Water, in Sabak Bernam recently that the federal government will not stop the Selangor government from taking over the state’s water services,” added the PKR leader.

Muhyiddin had reportedly stated as such four days ago when he reiterated that the Langat 2 water treatment plant project will commence despite Selangor’s opposition.

The state has steadfastly opposed the federal government’s Langat 2 project, citing the high costs involved that would force the state to increase the tariffs for water and renege on its pledge to provide the utility cheaply, a policy PR had introduced after winning power in Election 2008.

To facilitate the process, Selangor had first mooted the takeover in 2009, offering to buy Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Puncak Niaga Sdn Bhd (PNSB), Syarikat Pengeluaran Air Sungai Selangor Sdn Bhd (Splash) and Konsortium ABASS at RM5.7 billion. The offer was rejected.

Last year, Khalid was reported to have increased the offer to more than RM9 billion to take over all assets and liabilities of the companies, including their bonds.

The tussle for control of treated water supply in the country’s most developed state has become major vote fodder in the run-up to Election 2013 after Syabas raised the alarm last year of a possible crisis in the near future due to near-zero reserves at the state’s water treatment plants.

In recent weeks, Selangor and Syabas again locked horns when each blamed the other for the Klang Valley water crisis.

The blame game between the private company and Khalid’s government has been going on for months and took a new turn earlier this month when the mentri besar mooted a media drive relating their version of events plus a weekly update of the water problem, alleging that the latest disruption was due to Syabas’s poor upkeep leading to faulty pumps in urban Wangsa Maju and Pudu Hulu Baru.

Syabas, in retaliation, placed full-page advertisements in several major newspapers to rebut Selangor’s claims. 

The protracted battle for control of water resources Selangor has thrown a spotlight on how much money is at stake in the strategic industry and is potentially another example of Mahathir-era privatisation gone wrong.

It could also tilt the balance in the battle for both Selangor and Kuala Lumpur, depending on who voters ultimately blame for cuts to their water supply. PR parties rule Selangor and control 10 out of 11 parliamentary seats in the Federal Territory.

A-G admits to weaknesses in AES

Malaysian Insider, 13 January 2013

KUALA LUMPUR, Jan 13 — Attorney-General Tan Sri Abdul Gani Patail has admitted there are weaknesses in the controversial Automated Enforcement System (AES) to nab traffic offenders, but said his office was still in discussions over how to resolve the matter.

In a report today by Mingguan Malaysia, the country’s top lawyer said the decision over the fate of the thousands of summonses issued so far under the system could not revealed yet as it involves the cooperation of numerous agencies.

“I will release a statement to the media once everything is ready,” he was quoted as saying in the daily.

Abdul Gani (picture), however, said the summonses were still valid but admitted that the problematic issue was centred on the legal aspects of the speeding tickets.

The Attorney-General’s Chambers (AGC) and the federal government came under fire last month for freezing the prosecution of traffic offenders under the AES yet allowing the system to continue operating.

The freeze was ordered following an outcry after the system issued nearly 300,000 summonses since it kicked off on September 23.

But shortly after the freeze, Transport Minister Datuk Seri Kong Cho Ha said the AES would still operate as usual and summonses would continue to be issued, drawing more criticisms from those opposing the system.

“The government will not stop AES summons as it is already been decided in the last cabinet meeting,” Kong had said on December 26, referring to the approval of his ministry’s estimated expenditure under Budget 2013.

Kong also appeared to admit that there are legal issues related to the AES summonses themselves, and that the ministry was in the process of resolving the complication.

“It is almost done... I think this problem will be solved by the ministry soon,” he pointed out.

In the aftermath, PAS vice-president Datuk Mahfuz Omar declared the ongoing row over the traffic system a “political game”, and dared the government to suspend its implementation.

The opposition lawmaker accused Putrajaya of being less than transparent in the deal with the two firms operating the system — Beta Tegap Sdn Bhd and ATES Sdn Bhd, which were both contracted to install and run the speed-trap camera system that has sparked much public anger over what is seen to be a privatisation of traffic law enforcement.

The Malaysian Insider had also reported last month that Putrajaya was considering holding off the implementation of the system as it appeared to duplicate police speed traps along the highways.

The privatised RM700 million project began in September with a pilot phase of 14 cameras but the Road Transport Department has pledged to roll out a total of 831 cameras by end-2013 to catch speeding motorists and prevent more road deaths.

The police, who enforce the speeding laws, have said they will continue enforcement and put up mobile speed traps near the AES cameras, raising the prospect of dual fines for errant motorists.

Revised West Coast Expressway deal falls short of protecting taxpayers, says Pua

By Ida Lim

Malaysian Insider, January 07, 2013

KUALA LUMPUR, Jan 7 — The revised multi-billion West Coast Expressway (WCE) deal still falls short of protecting taxpayers’ interest and the prime minister’s promises for transparency, DAP publicity secretary Tony Pua said today.

Last week, The Edge business weekly had cited unnamed industry experts in its report that the privatisation deal for the 233km Taiping-Banting highway had revised terms that were more favourable to the government

But Pua (picture) said the deal was given through direct negotiation to Kumpulan Europlus Bhd (KEuro) which, he claims, is a company without the necessary track record and financial capability for the highway project.

He said that KEuro had “generated only RM19.8 million and RM27.7 million in revenues in its financial year 2012 and 2011”, adding that the company’s cash level of RM1.03 million was only 0.2 per cent of the capital required to carry out the project.

He said an “open and competitive tender” would have enabled Putrajaya to get the “best value” in its use of taxpayers’ funds.

Pua further said that Putrajaya had “failed to be transparent in the award because it has steadfastly refused to disclose the terms of the agreement.”

He said that the terms would contain important details such as the “benchmarks set for the cost of the highway, the toll rates to be charged, the details of the proposed profit-sharing formula” and “the rate of return defined for the early termination clause.”

The Petaling Jaya Utara MP again said the disclosure of terms would show whether the people’s interests are well-protected.

Pua said that Pakatan Rakyat (PR) promises to “carry out open, competitive and transparent tenders for all procurement and privatisation projects” and will make public all contracts with concessionaires.

He contrasted Putrajaya with the Penang PR state government, saying an open tender was carried out for the Penang People’s Park and the Subterranean Penang International Convention Exhibition (sPICE) public-private partnership project, with the contracts for the projects made public.

The Edge reported that West Coast Expressway Sdn Bhd (WCESB) had agreed with Putrajaya to hand over control of the highway once the operator recoups its investment from toll collection — even if this occurs before the 60-year expiry of the concession.

“If the highway makes its stated returns in the 50th year, the concession will end and the highway will be given back to the government,” a financial executive familiar with the agreement told the paper.

Apart from the early termination clause, the contract terms have been revised in the government’s favour, the paper reported, pointing to a new revenue-sharing mechanism and the removal of an up to 3 per cent interest subsidy from commercial loans for a period of 22 years.

“The government was of the view that the traffic forecast made by WCESB was too low and this is where the revenue sharing kicks in. If the traffic goes above the forecast, the government gains,” the paper quoted the same executive as saying.

Details of the agreed traffic volume, however, remain confidential.

The project has also been resized after both the government and the highway builder agreed to cut back about 25 per cent of the original plan, with the project now costing RM5.2 billion instead of the initial projection of RM7.07 billion.

Putrajaya is also extending RM1 billion to acquire land needed to build the highway, and a RM2.24 billion soft loan to the company to undertake the project. The loan deal comes with an annual interest rate of 4 per cent commencing in 2013.

WCESB’s parent company, KEuro, reported last year that it recorded a net loss of RM7.52 million for its third quarter ended October 31, 2012 compared with a net profit of RM1 million in the previous corresponding period.

The company told Bursa Malaysia that the loss reported in the current quarter was due to a share of losses in associates of RM2.9 million, a provision for doubtful debt of RM1.83 million and a finance cost of RM2.31 million.

“The preceding quarter’s losses were lower mainly due to the reversal of provision for doubtful debt amounting to RM3.51 million and the reversal of rental charges amounting to RM2.37 million, which were over provided in prior years,” KEuro said in a filing last December.

Revenue, however, increased to RM4.08 million from RM3.84 million a year ago.

Malaysia avoids default with EDL takeover

Reuters, 3 September 2012

KUALA LUMPUR, Sept 3 — Creditors facing a potential default on the MRCB Southern Link project bonds have been offered a lifeline after the federal government said last Thursday that it would take over the new Eastern Dispersal Link (EDL) in Johor Baru from the troubled concessionaire.

Fears that MRCB Southern Link was heading for a default in as little as four months prompted the government to step forward. The saviour in this case, however, was also the offender: it was the government’s ban on collecting tolls for the new highway project that caused default concerns in the first place.

The fact that the toll ban is legal under a concession agreement highlights the regulatory risks faced in privatised projects in the country.

The timing is not great for such a lack of regulatory clarity. Malaysia is in the middle of ramping up a massive infrastructure development programme that will need billions of dollars from the bond market. The federal government is on a RM230 billion programme to build a host of infrastructure projects, including power plants, toll roads, railways and property projects.

Some of the projects have already been awarded to private operators and tapped the market this year, including Prasarana’s RM2 billionn dual-tranche deal two weeks ago, Tanjung Bin’s RM3.29 billion funding in March and Tenaga Nasional’s RM4.85 billion financing last year.

Infrastructure projects are expected to drive the ringgit bond market to a record RM100 billion in volume this year, surpassing last year’s gross volume of RM67 billion.

But the government has shown in the past that it is not immune to public sentiments. It has interfered and caused concession agreements to seize up. After the global financial crisis, the government halted toll rate hikes in several projects, forcing some bond issuers to restructure debt.

The latest stumble came in March this year. The federal government banned MRCB from implementing toll charges on a newly completed EDL in Johor Baru. That road opened on April 1 and has since then seen no cashflow.

The concessionaire managed to meet its previous interest payment obligations. But investors were not certain the next payment, due in December, would come through. RAM Ratings suggested as much when it reported that MRCB made an unexpected RM40 million payment to its engineering, procurement and construction contractor, despite private assurances that it would keep aside enough funds to pay the interest in December.

This leaves only RM21 million in the company’s cash reserves, hardly sufficient to meet a RM47 million cumulative interest payment due December 21 on its RM1.04 billion senior and junior sukuk, as well as on a RM220 million syndicated bank loan. The shortfall is a reason RAM Ratings downgraded the long-term ratings on the RM845 million senior bond to BB3 from A2 and the RM199 million junior sukuk to C1 from BBB2.

Earlier last week, there was no sign from MRCB that it planned to fund any shortfall in meeting the debt obligations, the RAM report said. The company has not breached any of the technical covenants in the bonds, and the payment to the EPC contractor has not triggered an event-of-default clause for bondholders.

If MRCB defaulted on its payments, it would be one of the first toll road concessionaires to do so.

A default would impinge on an otherwise booming bond market. MRCB had been in talks since March with the federal government about plans for compensation in lieu of the toll revenues. But the discussions had dragged on without any conclusive details until last Thursday.

Officials from the Prime Minister’s Office said the government would take over the project but it was short on details. Final details of the takeover are expected only before the end of December. But the market will expect the government to take on the debt and possibly impose a smaller toll than the proposed RM6.20 under the original concession.

The government’s move was not completely unexpected. It has resolved troubled concessionaires in the past by extending the concession, reducing the toll or water rate, or buying bonds.

In June, the government established Pengurusaan Air, which sold a RM5.8 billion sukuk in June 11 to buy various debt facilities from several water concessionaires.

“Regulatory risks have increased compared with the past, but the government has in general shown that it would treat equitably those concessionaires hurt by its edicts,” said one credit analyst.

But detailed negotiations for MRCB may be impeded by an impending general election that could make decision-makers wary of undertaking any unpopular actions. Elections were expected to take place after September. But preparations for the Haj in October and the annual Umno assembly in the last quarter of the year may further push back the elections to next year.

In the meantime, the company is thought to be seeking creditors’ consent to amend terms on its sukuk, particularly to waive certain covenants such as the finance service reserve account bank guarantees to allow drawdowns for the toll road operations to continue. — Reuters

Putrajaya to take over EDL, as BN mounts defence of Johor

Malaysian Insider, 30 August 2012

KUALA LUMPUR, Aug 30 — The federal government will buy out the controversial Eastern Dispersal Link (EDL) in Johor Baru from concession holder Malaysian Resources Corporation Berhad (MRCB), in what appears to be a move to prevent the proposed toll for the Causeway that would have made it six times as expensive for roundtrips to Singapore and becoming fodder for Pakatan Rakyat (PR) in the Umno bastion.

Minister in the Prime Minister's Department Tan Sri Nor Mohamed Yakcop said today that details of the takeover will only be discussed later after talks between both parties.

MRCB had proposed a RM9.10 toll in each direction for passenger vehicles using its RM1 billion EDL highway from the Causeway to the immigration post.

However, the Umno-linked company is using an open toll system that charges the full fare at the new Custom, Immigration and Quarantine (CIQ) checkpoint regardless of where motorists exit or enter the highway — the latest facility for the ambitious Iskandar zone that celebrates its five-year anniversary this weekend.

The rest of the 8.1km stretch leading to the Pandan interchange of the North-South Highway will be free to local motorists.

Local business leaders had express concerns that, with the new CIQ already taking Singaporean tourists away from downturn Johor Baru, the EDL will see them skip the more inland Tebrau area as well.

Taxi drivers also called for an exemption as it would otherwise be unfeasible to ferry passengers across the Causeway.

The EDL opened on April 1 without any toll collection after being delayed from a scheduled first quarter launch.

In a visit to Johor in March, Prime Minister Datuk Seri Najib Razak had promised a solution to the controversy.

Over 50,000 vehicles cross the bridge daily, mostly Malaysians living in and around the state capital who commute to the island republic to work.

Johor Baru’s economy is also heavily reliant on Singaporeans who cross the Straits of Johor to enjoy cheaper prices there. 

Putrajaya set up the Iskandar zone five years ago to turn Johor Baru and its surrounding region into an economic growth area catering to the spillover from Singapore.

Cars and lorries exiting Singapore and heading into Johor now pay RM2.90 and RM5.50 respectively to use the bridge while motorcycles, which make up more than half of traffic across the Causeway, are exempt from the toll.

Singapore’s Straits Times reported in 2008 that rates will be raised every three years of the 30-year concession and will peak at RM14.60 for passenger vehicles and RM29.20 for lorries. 

Selangor may restructure water supply, says committee

STAR, 8 August 2012

KUALA LUMPUR, Aug 8 — The Selangor government can implement a water supply restructuring scheme as long as it adheres to the Water Services Industry Act 2006, as well as all water concession agreements and laws in force.

The matter was finalised by the Special Cabinet Committee on Selangor Water Issues in its meeting chaired by Deputy Prime Minister Tan Sri Muhyiddin Yassin on August 2.

According to the committee’s secretariat, the decision was in line with the Federal government’s stand not to get in the state government’s way of implementing its desired holistic restructuring model.

However, the secretariat said the implementation of the holistic model would require the state government to take over water concession companies in Selangor.

“Yet, the committee has no plan to interfere with the state government’s efforts to take over equity in the concession companies since it is a commercial transaction between the two parties that should be implemented on willing buyer-willing seller basis,” the secretariat said in a statement here today.

Nevertheless, the secretariat said the federal government, through the Pengurusan Aset Air Berhad (PAAB), would always be prepared to take over the liability and assets of the water concession companies at any time, an offer that had also been extended to other states.

“The committee is also of the opinion that the Selangor government and water concession companies should continue their discussions to finalise the restructuring scheme because the delay has had a big impact on the water services industry in the state,” the secretariat said.

On the implementation of the Langat 2 water treatment plant project, the committee agreed that the tender for the project be offered without waiting for the development from the relevant local authorities.

Until today, the Selangor government had prevented local authorities from issuing the development order for the project. — Bernama

Pulling plug on water rationing reveals Umno ploy, says Selangor

Malaysian Insider, July 23, 2012

A general view of the water treatment plant in Semenyih, July 23, 2012. Selangor insists that the reported water crisis has been manufactured to smear the state administration.—Picture by Saw Siow Feng

KUALA LUMPUR, July 23 ― Putrajaya’s admission that water rationing was not necessary in Selangor and Kuala Lumpur has proven that the issue was a political gimmick to discredit the Selangor government, state executive council member Elizabeth Wong said today.

She also said that Syarikat Bekalan Air Selangor (Syabas) has been turned into an Umno tool to coerce the Selangor government into approving the construction of the Sungai Langat Water Treatment Plant or Langat 2.

Putrajaya has said it will tender out the RM3.6 billion plant despite Selangor’s objections, citing hefty costs for constructing a new plant that will take two years to complete.

“The federal government has no real solution in improving the supply and management of treated water. In fact, they are trying to sabotage Selangor government efforts to do the right thing to protect people’s interests,” she said in a statement today.

Wong said Putrajaya did not enumerate Langat 2’s capability to address the water shortage whereas Selangor already has a RM225 million plan for water mitigation.

“What is needed is an independent committee to decide which project is more effective in solving the shortage of treated water at a low cost,” she added.

She told the Barisan Nasional (BN) federal government to acknowledge its mistake when signing the water privatisation agreement in 2004, saying the error cannot be rectified until now.

“The Selangor government has the right to take over Syabas under the Water Supply Industry Act 2006. The federal government’s decision to stop this effort shows that the BN government is partial to corporate companies linked to Umno rather than protecting the people’s interests,” she said.

Syabas is controlled by Puncak Niaga Bhd that is run by corporate figure Tan Sri Rozali Ismail, who is the Selangor Umno treasurer.

Wong also said that the chairman of the special Cabinet committee on water, Tan Sri Muhyiddin Yassin, has no experience in the matter and unable to contribute good ideas for water management.

“When he was the Johor mentri besar, he made the state water tariffs among the highest in the country,” she added.

She pointed out that efforts to privatise water supply in Johor to tycoon Tan Sri Syed Mokhtar Al-Bukhary’s MMC Corp Bhd will add to the “people’s burden”.

“The Johor people will face an unreasonable water tariff, unlike those in Selangor who receive free water. The BN government wants to pawn the rights of Johor people, but Pakatan Rakyat in Selangor will not keep quiet against those making a profit from people’s suffering,” the Bukit Lanjan assemblyman said.

Syed Mokhtar’s MMC conglomerate is seeking to form a special purpose vehicle with Pengurusan Aset Air Bhd (PAAB), a wholly-owned company under the Minister of Finance Incorporated, to take over the country’s water assets, The Edge Financial Daily reported today.

Muhyiddin, who is also deputy prime minister, also told reporters earlier today that the proposed Langat 2 water treatment plant was important to prevent Selangor, Kuala Lumpur and Putrajaya from reaching critical water supply levels by 2014.

He said the federal government will refer the Selangor government’s planned takeover of Syabas to the Attorney-General as it involved legal technicalities.

The Selangor government has also said it will pay to upgrade two water treatment plants to increase water supply if Putrajaya continued to delay transferring RM225 million for the project.

The two plants, Sungai Selangor Plant 1 (SSP1) and Sungai Selangor Plant 2 (SSP2), are currently running below their maximum capacity output due to infrastructural limitations to channel treated water out to the water supply network.

Chin: Khalid’s water tariff demand absurd

New Straits Times, 16 July 2012

PUTRAJAYA: The Selangor menteri besar’s demand over post-Langat 2 water tariffs is ludicrous, said Energy, Water and Green Technology Minister Datuk Seri Peter Chin Fah Kui.

Energy, Water and Green Technology Minister, Datuk Seri Peter Chin Fah Kui. NSTpix by Mohd Fadli Hamzah.

1 / 1

He said it was ridiculous to put the tariffs in writing now as there were many factors that needed to be taken into account when making the calculations.

“How can they ask us to put in writing the water tariff for the next one or two years? It cannot be determined today.

“The Selangor menteri besar (Tan Sri Abdul Khalid Ibrahim) should know that it is not a matter of putting a figure in writing.

The tariff must reflect the cost at the time, and must include all the cost factors,” he told the New Straits Times.

Chin said the cost would include the generative cost as well as the processing cost.

“We have to take into consideration the cost that the water concessionaires, such as Syarikat Pengeluar Air Sungai Selangor Sdn Bhd  and Puncak Niaga (M) Sdn Bhd,  are bearing. At the end of the day, the water tariff must reflect  the need at the time, and must recover the costs of the industry for it to survive.”

He was commenting on Khalid’s demand that the Federal Government put in writing the proposed post-Langat 2 water tariff and also declare water facilities worth RM10.5 billion as state assets.

Khalid last week issued the ultimatum, saying  the Federal Government needed to do it in writing and not just make verbal promises.

He had said the demands must first be met before both parties could even discuss about the Langat 2 treatment plant, which would ensure sustainable supply till 2030.

On Khalid’s second demand, that  RM10.5 billion worth of water facilities be declared state assets, Chin said the Selangor government must justify its claim on these facilities.

“The water treatment plants were built with money that was loaned from the Federal Government. In short, it must first justify and quantify these facilities, which it claims belong to it.

“They cannot generally declare the figures and not fully state where the figures came from,” he said, adding that these matters needed to be negotiated properly and not flung back and forth.

He said his ministry would facilitate the  meeting between Syarikat Bekalan Air Selangor  (Syabas) and the National Water Services Commission (Span) over water rationing in the Klang Valley.

“Syabas must get the approval from Span,  so my ministry will facilitate this.”

Nearly 210,000 households will be affected by the crisis as water reserve levels have  dropped to two per cent,  below the 10 per cent national safe level.

Syabas wants to start water rationing

STAR, 15 July 2012

PETALING JAYA: Water concessionaire Syabas will seek permission to start rationing immediately in Kuala Lumpur, Hulu Langat and Klang because of the worsening water supply shortage.

Syabas chief executive officer Datuk Ruslan Hassan said Selangor, Kuala Lumpur and Putrajaya were now facing a water crisis with reserve levels at 34 treatment plants down to an average of 2% way below the “safe mark” of at least 20% (see table).

The company asking for rationing approval from the National Water Services Commission listed 112 areas in Klang, Petaling, Hulu Langat and Kuala Lumpur as the worst hit by intermittent disruptions since April, affecting 209,678 premises and some one million residents.

Taps running dry: Ruslan (second from left) presenting drinking water to residents of Taman Sungai Besi Indah in Seri Kembangan who have been experiencing water shortage.

“We can no longer supply adequate water to Kuala Lumpur, Hulu Langat and Klang because we do not have the needed reserves,” Ruslan said, adding that the situation could worsen because of the dry spell.

He was speaking to reporters during the distribution of water to residents of Taman Sungai Besi Indah in Seri Kembangan, one of the areas in Selangor hit by supply disruption.

The housing estate and its surrounding areas have been without water since Friday evening.

Ruslan said the company was preparing a list of neighbourhoods that would be affected by the rationing, with supply to be cut off either for several hours daily or on alternate days.

He said Syabas had received thousands of telephone calls from angry residents complaining of supply disruptions.

The company's 42 water tankers, 6,700 static water tanks and 3,000 employees could only cope with a disruption affecting a maximum of 250,000 premises at any one time, he added.

“If the situation worsens, up to 7.1 million residents in Kuala Lumpur, Putrajaya and Selangor will be affected. This will be beyond our ability to handle on our own,” Ruslan said.

On the unwillingness of the Selangor Government to agree to the federal proposal for a Langat 2 treatment plant and a Pahang-Selangor transfer of raw water, Ruslan urged the two sides to negotiate.

“We ask the state and federal governments to settle whatever differences they have to resolve this issue to ensure adequate water supply,” he said.

Keeping stock: Salmah Mad Amin carrying pails of water provided by Syabas following water supply shortage at Taman Sungai Besi Indah in Seri Kembangan.

Ruslan said the Federal Government had approved about RM650mil worth of mitigation projects to cope with demand while waiting for the Langat 2 project impasse to be resolved.

These include the Sungai Labu water treatment project to meet the needs of Sepang and Nilai and Phase 3 of the Sungai Selangor water scheme to serve southern Selangor.

Ruslan said all the projects were scheduled to be completed by 2015.

Peter Chin: Federal take over of water concessionaires only in emergencies

STAR, 12 July 2012

SHAH ALAM: The Energy, Green Technology and Water Minister's power to forcefully take over water operations from concessionaires under the Water Services Industry Act (WSIA) only applies during an emergency.

Minister Datuk Seri Peter Chin Fah Kui said he could not speed up the restructuring of the water industry in Selangor by forcing the existing operators to sell their assets to the government under normal circumstances.

“I have the power to make such an announcement only during an emergency. Then I can take over (operators) Syabas, Abbas, Splash and others. But we have yet to reach a state of emergency,” he told the audience at a water forum here organised by his ministry.

Chin repeated his call to the Selangor state government to not link the water industry restructuring exercise with the construction of the Langat 2 water treatment plant.

He said the issue of water shortage must be addressed urgently, but there was plenty of time to negotiate the water industry restructuring deal.

“I asked the Attorney-General if I can tender for Langat 2 without the consent of the Selangor state government. He said no, because land matters are under the purview of the state.

“If I gave out the tender, the state can block the contractors from entering the site,” he said.

Agriculture and Agro-based Industries Minister Datuk Seri Noh Omar, who is also Selangor Umno deputy chairman, said the state government should allow Langat 2 to proceed to ensure adequate water supply and only debate over the water tariff rates later.

“If there is no point discussing tariffs if there is no water to supply,” he told reporters after the forum.

Business, worker groups reject Penang Port privatisation

By Lee Wei Lian

Malaysian Insider, July 10, 2012

KUALA LUMPUR, July 10 — A group of manufacturers and port workers have rejected Putrajaya’s proposal to privatise Penang Port which could spell trouble for any plans for a smooth takeover by tycoon Tan Sri Syed Mokhtar Al-Bukhary.

Both state Pakatan Rakyat (PR) and Barisan Nasional (BN) leaders have also voiced their disapproval to the Finance Ministry plan to sell the port to Syed Mokhtar’s Seaport Terminal, which also runs the Port of Tanjung Pelepas and Johor Port over fears that Penang could be reduced from a northern shipping hub to a minor role.

“Reject the privatisation of Penang Port to an outsider done without consultation with the people of Penang,” said the first resolution agreed by the 42 representatives of local groups in a statement issued last night.There is also fear among local BN politicians that the federal government’s move could cost them a chance to regain the state in the next general election due by next April.

The statement from the Penang state government said the Malay, Indian, Chinese Chambers of Commerce, the Federation of Malaysian Manufacturers (FMM), the Malaysian International Chamber of Commerce and Industry (MICCI), Frepenca (the Free Industrial Zone, Penang, Companies’ Association), logistics providers, freight forwarders, importers and exporters, shipping companies and agents as well as stevedores and port employees had rejected the port privatisation plan which they say would reduce the 220-year-old port to feeder status.

The rejection of the planned privatisation was one of five resolutions adopted after the various groups had met with the state administration which had initiated a roundtable discussion.

The other resolutions included calling for the immediate deepening of the port channel to accommodate larger vessels, the rejection of any proposal to relegate the port to feeder status, the revamp of the iconic Penang ferry service and that the port be returned to the state.

Penang Chief Minister Lim Guan Eng had come out strongly against the deal, saying that it was unlikely that Seaport Terminal would channel resources into Penang Port as the latter would prefer to boost his main transshipment hub Port of Tanjung Pelepas in Johor while “condemning” Penang Port, which is closely tied to the identity and economy of the state, into a “feeder port.”

Penang BN chairman Teng Chang Yeow had also urged the federal government to review its decision to privatise the island’s port, saying that many industry groups were opposed to the move and it was also counter to the sentiment of Penang folk.

MCA president Datuk Seri Dr Chua Soi Lek, who is also Penang Port Commission chief, said however that any attempt at non-co-operation by the state administration was akin to self-sabotage as the move to sell the port was made with an eye on enhancing efficiency.

“The privatisation is not to sabotage but to improve the efficiency of the port. They can fight the federal government or try to derail it but if they refuse to co-operate they will be sabotaging themselves,” he had said.

It is unclear however if political and industry resistance would be able to scupper the deal, which was confirmed by the Transport Ministry last month, especially if Syed Mokhtar’s track record is anything to go by.

The media-shy businessman has in recent years managed to assemble a vast empire of strategic assets spanning from ports to power plants, from rice and gas distribution to national carmaker Proton.

His logistics empire includes Pos Malaysia, the two ports in Johor, an airport, and his flagship enterprise MMC was reported to be evaluating the takeover of national railway KTM Berhad. MMC is also part of a joint venture working on the country’s largest infrastructure project, the My Rapid Transit (MRT) in the Klang Valley.

The acquisition spree has come at a heavy cost however and opposition lawmaker Tony Pua estimated that Syed Mokhtar’s companies have a combined debt of RM34.3 billion or more than 10 per cent of all local corporate bonds as of 2011.

Analysts said that a takeover of Penang Port by Syed Mokhtar could potentially see the port being grouped together with Johor Port and Port of Tanjung Pelepas in a new corporate entity and listed on the stock exchange.

Penang Port has declined from its once premier status ever since its free port status was taken away in the 1974.

In contrast, newcomer Port of Tanjung Pelepas started operations in 1999 but now handles more than six million TEUs a year, five times more than Penang Port.

Penang also saw cargo volumes growing only 5.8 per cent a year between 1995 and 2009 compared with Port Klang which grew 14.2 per cent annually.

The PR-controlled state administration has complained that federal ownership of the port operator has worsened its financial position, with net debt rising from RM148 million in 2004 to RM832 million in 2009 — a 462 per cent increase in five years.

Selangor to take over Syabas water supply work

By Hafidz Baharom

Malaysian Insider, July 16, 2012

SHAH ALAM, July 16 — Selangor will take over water utility Syabas’ operations to avert a supply crisis that has been described as “suspicious”, Mentri Besar Tan Sri Khalid Ibrahim said today.

He said the state government was invoking clause 32 of the concession agreement to Syarikat Bekalan Air Selangor (Syabas) and will inform the federal government of its decision.

“The water shortage and the announcement of a water-rationing programme by Syabas are suspicious to the Selangor state government as both the State Water Commissioner and Syabas’ own board of directors were not informed of this proposal,” Khalid told a press conference here.

He has also directed the State Secretary and the State Water Commission to monitor Syabas’ operations and present a daily report on the current water levels state-wide.

“As of April 2012, Syabas still has RM2.8 billion in arrears and has failed to reduce non-revenue water to 20 per cent,” he added.

Khalid also said the early audit reports showed that Syabas was not handling its capital expenditure well.

The mentri besar also said legal action would be taken if Putrajaya refused the state’s request to step in and resolve an impasse over future water supply.

On July 14, Syabas presented the Malaysian National Water Services Commission (SPAN) with a water-rationing plan that will affect the Klang Valley, particularly Kuala Lumpur, Hulu Langat and Klang.

In its last weekly report available on its website, Syabas recorded on July 5 that the average demand for water was 4,324.79 million litres a day (MLD) with clean water reserve being at 46.21 MLD, or 1.6 per cent, far below the recommended reserve of 20 per cent.

The utility provider also stated in June that the water shortage was caused by a lack of rain, contamination of rivers and scheduled maintenance work at water treatment plants.