| Written by Sharon Tan |
| Edge Financial Daily, 25 May 2011 |
| The conditional offer amounting to RM6.5 billion, which expires on May 31, would see Acqua SPV paying the settlement value for the securities based on the purchase yield to maturity, according to sources familiar with the matter. This latest development confirms a front page story in The Edge Financial Daily on May 12, 2011 that the federal government and PAAB were said to have finalised a RM6.5 billion proposal to take over the Selangor state’s water-related bonds, and that an offer was likely to be made within two weeks. It is learnt that Acqua SPV is offering a yield of between 4.83% and 7.36% for the remaining tranches of bonds maturing in 2013 to 2023. “The yield price offered basically allows most bondholders to get out with a profit. “For the 2021 paper, the buyback yield is at 5.82% against mark to market at the end of last month at 14.2%. This means that in terms of price, the buying back is at 94.49 against mark to market value of only 54.54 at the end of last month,” said a source. The bondholders are understood to include Great Eastern Life Assurance (M) Bhd, CIMB Group Holdings Bhd, the Employees Provident Fund (EPF) and Kumpulan Wang Amanah Pencen. Among the water players in Selangor is Puncak Niaga Holdings Bhd, which has two concessions — Puncak Niaga (M) Sdn Bhd, a treatment player and its 70%-owned unit Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), a distributor. Puncak Niaga is controlled by Tan Sri Rozali Ismail. Another company which has a water treatment concession is Syarikat Pengeluar Air Sungai Selangor Holdings Bhd (Splash), which is 40%-controlled by construction giant Gamuda Bhd, and 30% each by Kumpulan Perangsang Selangor Bhd (KPS) and Tan Sri Wan Azmi Wan Hamzah’s The Sweet Water Alliance Sdn Bhd. KPS is 60.7%-controlled by Kumpulan Darul Ehsan Bhd, the Selangor state investment arm. The other water treatment concessionaire is Konsortium Abass Sdn Bhd, which is 55%-controlled by KPS and 45% by Operasi Murni Sdn Bhd. An analyst said the government’s takeover of the bonds was imminent since there are repayments due in the next couple of months. He said the RM6.5 billion offer from the federal government, after a RM200 million discount, will be spread out among the bondholders. “But the interesting part is the equity side. This remains to be seen. The bond issues can be solved but the equity is another ball game. The bottom line is both the Selangor and federal governments want control. They want to champion cheap water. “In this instance, the state government also has a stake in the water supply chain,” he said. The analyst also said there was a disconnect between the federal government and the state government where the valuation of physical assets is concerned. The state owns about 80% of the physical assets such as pipes and water treatment plants. “PAAB will still have to pay for these assets ultimately,” he added. A bondholder said the acquisition was expected as it is in line with the consolidation of the water industry to ensure the sustainability of investor confidence for infrastructure and utility projects in Malaysia. “The acquisition will simplify the credit risk of what was previously a fragmented and complicated group of utility bonds, which were built on a web of SPVs (special-purpose vehicles” he said. Asked if the RM6.5 billion figure that has been bandied about was a fair number for the bondholders, he replied: “At the end of the day, the acquisition monies required would at least closely reflect the bonds’ outstanding nominal value. “However, from an investor’s standpoint, a more holistic approach to overall returns should be addressed. For example, much management time was wasted during lengthy and numerous meetings in the initial stages of the water bonds’ financial distress, and [this] does not compensate investors for lowered yields and stretched payback periods after the acquisition.” On Monday, Energy, Water and Green Technologies Minister Datuk Seri Peter Chin Fah Kui said the Cabinet would decide on the acquisition of the Selangor water bonds but to date there is no Cabinet paper on the matter. “It is for the Cabinet to decide. The paper has not gone in yet. Wait for the paper to be submitted to the Cabinet,” Chin told the media when asked if the federal government would take over the water bonds. Petaling Jaya Utara MP Tony Pua meanwhile, said in a statement any move by the government to bail out the debts of the privatised Selangor water companies has in effect killed any remaining possibility of the state government striking a deal with the companies to restructure and take over the water industry in Selangor. Pua said had there been no bailout offered by the federal government, the companies would have to negotiate the terms of restructuring with the state government or other parties that have made offers to acquire the businesses and assets. The Selangor government had made several offers to acquire the water companies. In January, it made an offer of more than RM9 billion for the water assets. Prior to that, in April last year, Gamuda made a RM10.75 billion offer to take over the water assets in Selangor. A month earlier, the federal government via PAAB made an offer to acquire all the water assets from the concessionaires for RM8.3 billion. “However, as a result of the federal government bailing out the massive debts, it has relieved these companies of their cash flow problems. This will mean that there is now no urgency for these companies to agree to any form of restructuring as desired under the Water Services Industry Act (2006) as they now have the upper hand at the negotiating table at the expense of the rakyat. “In fact, the likely outcome of the bailout is that the federal government will follow up with the taking over of the water-related assets. The privatised water concessionaires will continue to operate and profit from the provision of water services in Selangor, without being burdened by debts,” said Pua, adding that Chin ought to clarify the move for the bailout. |
Showing posts with label Water. Show all posts
Showing posts with label Water. Show all posts
Friday, June 3, 2011
PAAB to acquire water bonds
Acqua SPV buys RM5.8bil Selangor water bonds
PUTRAJAYA: Acqua SPV Bhd, a special-purpose vehicle set up by Pengurusan Aset Air Bhd (PAAB), has acquired 99.6% of Selangor water bonds amounting to RM5.8bil in nominal value.
PAAB chief executive officer Datuk Ahmad Faizal Abdul Rahman said bondholders would be paid accordingly within this month.
“It (the payment) depends on the maturity because different bond tranches have different maturity. And for the different programmes we need to give seven days notice, some 14-day or 21-day. That’s why we give up to end-June,” he said at a press conference after a signing ceremony between PAAB and Penang government on a water restructuring deal.
Faizal said the offer acceptance had been completed and it was not on the payment. He stressed that the payment from PAAB would not be an issue.
He said the offer took into account various factors such as the ratings, current yields, coupon structures and levels of liquidity of the bonds. “We are confident in achieving the 100% target within this week, pending official confirmation from several bondholders who have given positive indication earlier,” Faizal said.
According to documents obtained by StarBiz on May 24, Acqua SPV will pay the bondholders based on their relevant purchase yield to maturity.
The offer documents provided a comprehensive table explaining the settlement value and the payment will be made to bondholders by June 30.
A source said PAAB had identified the remaining three bondholders and was certain it would be able to convince them.
The source said the offer was a “fair value” and the acceptance level by PAAB indicated that it was a good offer.
Acqua SPV had on May 20 made an offer to buy the Selangor water bonds to the existing bondholders of Syarikat Bekalan Air Selangor Sdn Bhd, Syarikat Pengeluaran Air Sungai Selangor Sdn Bhd, Puncak Niaga Sdn Bhd, Titisan Modal Sdn Bhd and Viable Chip Sdn Bhd under seven bond programmes.
In a statement yesterday, Acqua SPV the exercise was seen as an interim measure to consolidate the assets and liabilities of the water operators while negotiations between the Federal Government and the Selangor state government on the restructuring of the state water industry continue.
“This acquisition, however, will not relieve any existing obligations of the issuer under the current terms and conditions of the respective bond programme,” it said, adding that Acqua SPV was merely taking over the ownership and role of the existing bondholders.
It said the protracted negotiations between the Federal Government and the state government on the restructuring of the water industry in Selangor had resulted in the deterioration of cashflows of the water concessionaires, seriously jeopardising the ability to service the bonds. — By LEONG HUNG YEE
Water deal a 'victory for people'
New Straits Times, 2 June 2011
PUTRAJAYA: Penang yesterday signed a water restructuring deal with the Federal Government -- a move which Prime Minister Datuk Seri Najib Razak described as a "victory" for the people of Penang.
This was because the deal, signed with Pengurusan Aset Air Berhad (PAAB), which is a state government-owned company, "will not burden the people, financially".
Najib said the deal "means a lot" as Penang was an opposition-ruled state.
He hoped that other opposition-ruled states -- Selangor, Kelantan and Kedah -- would follow suit.
"This collaboration between the federal and state governments will see that water is managed more efficiently and clean and quality water is supplied to the rakyat at an affordable price.
"This deal is an example of strong cooperation between two quarters for the sake of the state's development and well-being of the people.
"The interests of the people have always been the government's priority.
"I hope other states will also join this initiative for the benefit of the people," Najib said at the signing ceremony here, yesterday.
He added that the water tariff would be decided by the state government.
Present were Energy, Green, Technology and Water Minister Datuk Seri Peter Chin Fah Kui, Penang Chief Minister Lim Guan Eng and PAAB chairman Datuk Seri Mohamad Tajol Rosli Mohd Ghazali.
Penang became the fifth state to agree to a water restructuring initiative after Malacca, Negri Sembilan, Johor and Perlis.
Najib said the move would lead to rapid development in the state, especially the water industry.
He said the water restructuring initiative began in 2005 when the Federal Government amended the federal constitution to allow water supply and service to come under the purview of both the federal and state governments.
Under the agreement, Penang will be alienating a total of RM655.2 million worth of water-related assets to PAAB while the company will take over the state's water liability from the Federal Government for the same sum and lease the water assets to the Penang Water Supply Corporation (PBAPP).
The deal also allows PBAPP to either finance its water development via PAAB or separately.
Najib said the deal was the "first of its kind" as the water operator was granted both service and facility licences that will run until May 31, 2014. "This initiative proves that the Federal Government is serious in creating a holistic and efficient water industry in the state by taking into account all aspects, such as water demand, operations and financial stability."
Lim, meanwhile, said the state government would be given RM1.2 billion in grants to expand the Mengkuang Dam in Penang. Construction will begin in August.
Currently, the dam's capacity is 23 million cubic metres. The expansion will see the capacity increasing to 78 million cubic metres to meet the state's water needs until 2020.
The expansion project has been awarded to China International Water and Electrical Corp (M) Sdn Bhd.
Lim also said the current 20 per cent water conservation surcharge for excessive water usage would be reviewed by the end of the year.
He also promised not to increase the water rates for domestic users.
PUTRAJAYA: Penang yesterday signed a water restructuring deal with the Federal Government -- a move which Prime Minister Datuk Seri Najib Razak described as a "victory" for the people of Penang.
This was because the deal, signed with Pengurusan Aset Air Berhad (PAAB), which is a state government-owned company, "will not burden the people, financially".
Najib said the deal "means a lot" as Penang was an opposition-ruled state.
He hoped that other opposition-ruled states -- Selangor, Kelantan and Kedah -- would follow suit.
"This collaboration between the federal and state governments will see that water is managed more efficiently and clean and quality water is supplied to the rakyat at an affordable price.
"This deal is an example of strong cooperation between two quarters for the sake of the state's development and well-being of the people.
"The interests of the people have always been the government's priority.
"I hope other states will also join this initiative for the benefit of the people," Najib said at the signing ceremony here, yesterday.
He added that the water tariff would be decided by the state government.
Present were Energy, Green, Technology and Water Minister Datuk Seri Peter Chin Fah Kui, Penang Chief Minister Lim Guan Eng and PAAB chairman Datuk Seri Mohamad Tajol Rosli Mohd Ghazali.
Penang became the fifth state to agree to a water restructuring initiative after Malacca, Negri Sembilan, Johor and Perlis.
Najib said the move would lead to rapid development in the state, especially the water industry.
He said the water restructuring initiative began in 2005 when the Federal Government amended the federal constitution to allow water supply and service to come under the purview of both the federal and state governments.
Under the agreement, Penang will be alienating a total of RM655.2 million worth of water-related assets to PAAB while the company will take over the state's water liability from the Federal Government for the same sum and lease the water assets to the Penang Water Supply Corporation (PBAPP).
The deal also allows PBAPP to either finance its water development via PAAB or separately.
Najib said the deal was the "first of its kind" as the water operator was granted both service and facility licences that will run until May 31, 2014. "This initiative proves that the Federal Government is serious in creating a holistic and efficient water industry in the state by taking into account all aspects, such as water demand, operations and financial stability."
Lim, meanwhile, said the state government would be given RM1.2 billion in grants to expand the Mengkuang Dam in Penang. Construction will begin in August.
Currently, the dam's capacity is 23 million cubic metres. The expansion will see the capacity increasing to 78 million cubic metres to meet the state's water needs until 2020.
The expansion project has been awarded to China International Water and Electrical Corp (M) Sdn Bhd.
Lim also said the current 20 per cent water conservation surcharge for excessive water usage would be reviewed by the end of the year.
He also promised not to increase the water rates for domestic users.
Thursday, May 19, 2011
RM6.5b offer for Selangor water bonds?
Kuala Lumpur: The federal government is poised to make a RM6.5 billion offer today to buy over the Selangor water debts from bondholders.
It is understood that the offer will be made through the federal government and Pengurusan Aset Air Bhd (PAAB), the government's water asset management company.
The offer is a RM200 million discount to the value of the outstanding water bonds of RM6.7 billion.
"The federal government is stepping in to buy over the bonds with a slight discount to what the lenders want. The lenders will have to mark the losses in their book," an industry sources told Business Times.
Lenders include Maybank Investment Bank and CIMB Group, which hold about RM1 billion of the outstanding water bonds. Insurance firms and pension funds hold about RM2 billion each while the rest is held by fund managers such as AmInvestment, CIMB Principal, RHB Asset Management and Public Mutual.
A source said the government is dealing directly with the lenders and has been in heavy discussions following the recent approval from the Minister of Finance Inc to take over the bonds.
"The ultimate aim is for the government to own the assets and debts of the water companies in Selangor in an effort to consolidate the water industry," the source said.
This is the first phase of the consolidation as by June 2, the government is expected to make an offer to buy the water assets in Penang for more than RM3 billion.
The Selangor asset owners are Puncak Niaga (M) Sdn Bhd and Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) - both controlled by Puncak Niaga Holdings Bhd - as well as Syarikat Pengeluar Air Sungai Selangor Bhd (Splash) and Konsortium Abass Sdn Bhd.
The source said there is a possibility the debt could be converted into shares at a later stage.
"This is one of the options being discussed," he said.
The national water restructuring plan is meant to relieve the states and concessionaires of the heavy burden of funding future water infrastructure development.
After the restructuring, the responsibility falls under the purview of the federal government and PAAB, which is entrusted to buy over the states' water assets, making them asset-light and allowing them to focus on operations and maintenance.
The offer is a RM200 million discount to the value of the outstanding water bonds of RM6.7 billion.
"The federal government is stepping in to buy over the bonds with a slight discount to what the lenders want. The lenders will have to mark the losses in their book," an industry sources told Business Times.
Lenders include Maybank Investment Bank and CIMB Group, which hold about RM1 billion of the outstanding water bonds. Insurance firms and pension funds hold about RM2 billion each while the rest is held by fund managers such as AmInvestment, CIMB Principal, RHB Asset Management and Public Mutual.
"The ultimate aim is for the government to own the assets and debts of the water companies in Selangor in an effort to consolidate the water industry," the source said.
This is the first phase of the consolidation as by June 2, the government is expected to make an offer to buy the water assets in Penang for more than RM3 billion.
The Selangor asset owners are Puncak Niaga (M) Sdn Bhd and Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) - both controlled by Puncak Niaga Holdings Bhd - as well as Syarikat Pengeluar Air Sungai Selangor Bhd (Splash) and Konsortium Abass Sdn Bhd.
The source said there is a possibility the debt could be converted into shares at a later stage.
"This is one of the options being discussed," he said.
The national water restructuring plan is meant to relieve the states and concessionaires of the heavy burden of funding future water infrastructure development.
After the restructuring, the responsibility falls under the purview of the federal government and PAAB, which is entrusted to buy over the states' water assets, making them asset-light and allowing them to focus on operations and maintenance.
Putrajaya to take over Selangor’s water debt for RM6.5b
Malaysian Insider, 20 May 2011
KUALA LUMPUR, May 20 — The federal government is slated to pay RM6.5 billion to bond holders for the water debts in the country’s most industrialised state of Selangor, the Business Times said today.
“The ultimate aim is for the government to own the assets and debts of the water companies in Selangor in an effort to consolidate the water industry,” the Business Times quoted an industry source as saying.
The major owners of water assets in the central state of Selangor include subsidiaries controlled by Puncak Niaga and Gamuda .
Officials in those companies and the government could not be immediately reached for comment.
The newspaper said the Selangor offer was the first phase of water industry consolidation and the government was expected to buy the assets in the northern state of Penang for RM3 billion.
The government wants to restructure water assets and relieve the burden of funding water infrastructure development that has been usually taken up by water companies and the state governments.
The Selangor offer, which is likely to be made today by the government’s water asset management firm PAAB, is at a RM200 million discount to the value of the outstanding water bonds at RM6.7 billion, the newspaper said.
“The federal government is stepping in to buy over the bonds with a slight discount to what the lenders want. The lenders will have to mark the losses in their book,” the newspaper cited the industry source as saying.
Lenders such as investment banking arm of Maybank and CIMB Group hold about RM1 billion of the outstanding debt. Insurance firms and pension funds hold about RM2 billion each while local fund managers hold the rest. — Reuters
Time to review water tariff, says group
New Straits Times, 23 April 2011
The Malaysian Water Association (MWA) has proposed that water utility companies in the country review the current water tariff structure in their respective states as a sustainable measure to face an impending water crisis.
MWA president Ahmad Zahdi Jamil said this was because the current tariff does not promote water sustainability and besides being too cheap, it was also not punitive towards excessive use of water.
"Major states in Malaysia will be facing severe water shortage in 2014 if measures are not taken to curb excessive wastage and high non-revenue water (NRW) levels," he told reporters after the MWA's 23rd Annual General Meeting held today.
Citing Johor and Penang as examples, he said domestic water tariff in Johor was the highest among states in Peninsula Malaysia with RM0.61 per cubic meter compared with Penang which is the cheapest at RM0.20 per cubic meter.
Difference in tariff also affected the level of water consumed, with consumers in Johor consuming 205 litre per capita per day in 2009 compared with 286 litre per capita per day by consumers in Penang, he said.
Ahmad Zahdi said according to the Water Sustainability Index (WSI) the availability and usage of water in Malaysia had shown a drop from 64 per cent in 1992 to 33 per cent in 2002, a reflection that the country's water resources are rapidly depleting and have been managed unsustainably.
He said the timely review must take into consideration the affordability for the poor consumers and its ability to increase water conservation among the people.
"Increase in water tariff must modeled in such a way as not to burden the poor and it should not be done drastically. In the long run, the increase must reflect the recoverable cost," he stressed.
Malaysia recorded the highest water usage and has the
cheapest tariff among countries in Asean.
On average, Malaysians consumed 280 litres of water daily, higher than Singapore (155 litre), the Philippines (175 litres), and Indonesia (130 litres). -- Bernama
| |
MWA president Ahmad Zahdi Jamil said this was because the current tariff does not promote water sustainability and besides being too cheap, it was also not punitive towards excessive use of water.
"Major states in Malaysia will be facing severe water shortage in 2014 if measures are not taken to curb excessive wastage and high non-revenue water (NRW) levels," he told reporters after the MWA's 23rd Annual General Meeting held today.
Citing Johor and Penang as examples, he said domestic water tariff in Johor was the highest among states in Peninsula Malaysia with RM0.61 per cubic meter compared with Penang which is the cheapest at RM0.20 per cubic meter.
Difference in tariff also affected the level of water consumed, with consumers in Johor consuming 205 litre per capita per day in 2009 compared with 286 litre per capita per day by consumers in Penang, he said.
Ahmad Zahdi said according to the Water Sustainability Index (WSI) the availability and usage of water in Malaysia had shown a drop from 64 per cent in 1992 to 33 per cent in 2002, a reflection that the country's water resources are rapidly depleting and have been managed unsustainably.
He said the timely review must take into consideration the affordability for the poor consumers and its ability to increase water conservation among the people.
"Increase in water tariff must modeled in such a way as not to burden the poor and it should not be done drastically. In the long run, the increase must reflect the recoverable cost," he stressed.
Malaysia recorded the highest water usage and has the
cheapest tariff among countries in Asean.
On average, Malaysians consumed 280 litres of water daily, higher than Singapore (155 litre), the Philippines (175 litres), and Indonesia (130 litres). -- Bernama
Selangor invites Putrajaya back to table over water
Malaysian Insider, May 18, 2011
The Selangor mentri besar said the construction of water treatment plants on Sungai Langat, or Langat 2, will be discussed at the meeting. — file pic
KUALA LUMPUR, May 18 — Selangor Mentri Besar Tan Sri Khalid Ibrahim said today that the state government has agreed to hold another round of talks over the stalled water restructuring issue with the federal government.
Both the state and federal governments have been locked in a struggle over water assets in Selangor since Pakatan Rakyat (PR) took control of the state in 2008, with neither side wanting to give the other control over the critical industry.
Khalid said that a letter would be sent to the Ministry of Energy, Green Technology, and Water regarding the special meeting due to take place in the first week of June.
“The state executive council agreed today to hold a special meeting to discuss restructuring the water industry with the federal government.
“This special meeting will be held during the first week of June and the agenda includes the construction of water treatment plants on Sungai Langat or Langat 2 where the state government will decide whether it should issue a directive on its construction,” he told reporters during a press conference.
In January, Energy, Green Technology and Water Minister Datuk Seri Peter Chin announced that the Selangor government had promised in December last year to allow the federal government to build Langat 2, which is part of the Pahang-Selangor water transfer project.
Chin had said his ministry would put the project out to tender by February at the very latest despite the absence of written approval from the state.
The Selangor government immediately denied giving Putrajaya the go-ahead for the Langat 2 water treatment plant.
State government sources revealed that Selangor, in its December 8 meeting with the ministry, had only agreed to study the “critical path” for both the Langat 2 and Pahang-Selangor water transfer projects before making a decision this month.
The Critical Path Method, developed in the 1950s, is an important tool in project management for scheduling project activities.
The Energy Minister has said that the RM8.65 billion water-transfer project must be completed by 2014 to ensure adequate water supply for residents in Selangor, Kuala Lumpur and Putrajaya.
Khalid, however, has argued that there is no rush to complete the Pahang-Selangor transfer as the state has enough water to fulfil residents’ needs until 2019.
Today, Khalid reiterated that priority should be given to consolidating Selangor’s water players and not to the Langat 2 project, calling for both issues to be discussed jointly.
“The Selangor government will continue to cooperate with all parties and does not object to the construction of Langat 2, but believe that this project should be done after the restructuring of the water industry is resolved,” he added.
Chin warned the Selangor government last year it risked legal action by delaying construction of the water treatment plant, which had been scheduled to begin in August last year.
Tuesday, December 15, 2009
S'gor never asked PAAB to lead talks, says water panel
Edge, 14 December 2009
KUALA LUMPUR: The Selangor state government did not request for Pengurusan Aset Air Bhd (PAAB) to step in to lead the talks in the state's water consolidation exercise as allegedly claimed by PAAB CEO Ahmad Faizal Abdul Rahman.
The members of parliament of Selangor Water Panel, which consist of Tony Pua (Petaling Jaya Utara-DAP), Dr Dzulkifli Ahmad (Kuala Selangor-PAS), William Leong (Selayang-PKR) and Charles Santiago (Klang-DAP), also refuted claims that it was the Selangor government that had caused the water talks to break down.
Ahmad Faizal had blamed the Selangor government for delays resulting in the state's water consolidation talks exceeding a year, according to an interview published by an English daily last Saturday.
"It is the federal government's insistence that Syabas remain the concessionaire for water distribution in the state.
"During the negotiations, the state government had even accepted a compromised proposal where Syabas will remain 51% majority shareholder on condition that there would be an independent professional management and equal board representation," said Pua in a press conference in parliament lobby today.
The water panel also slammed the federal government for offering Syabas a way out of its cash flow problems.
"The fact the federal government had been secretly negotiating a RM320 million interest free, unsecured and back loaded loan facility to Syabas serves only to prove the federal government's bad faith in the entire water talks, for while the state government is negotiating hard the terms of the new concession, the federal government is offering Syabas a way out for its major cash flow problems, which removes the incentive for Syabas to deal with the state government," said Pua.
He added that the lack of commitment from the federal government was clear when it refused to use it powers to get Syabas to the negotiating table with the state government.
According to Pua, Section 114 of Water Services Industry Act gives power to the Energy, Green Technology and Water Minister to force water players to hand over the assets for the sake of national interest.
In the said article, Faizal had also disclosed that PAAB would take into account the fact that the concessionaires' "liabilities are much higher than the tangible assets".
"This means the rakyat will have to bear the liabilities of these concessionaires as part of the takeover of water assets," said Pua.
He said PAAB was not consolidating or restructuring the state's fragmented water industry but was purchasing the concessionaires' assets at higher prices while continuing to issue operating and maintenance licences.
Leong meanwhile said PAAB's conduct had deviated from the objective of the Act.
"The objective of the Act is to enable the state government to operate the water concessions. Now this facility has been given to the concessionaires and not the state government," he said.
Santiago added that there was a sense of "regulatory capture" in the water issue where the companies being regulated were determining the outcome.
Asked what the water panel intended to do in the coming weeks, Pua said it would not rule out "necessary actions" on both concessionaires and the federal government should their meetings fail to achieve a result.
KUALA LUMPUR: The Selangor state government did not request for Pengurusan Aset Air Bhd (PAAB) to step in to lead the talks in the state's water consolidation exercise as allegedly claimed by PAAB CEO Ahmad Faizal Abdul Rahman.
The members of parliament of Selangor Water Panel, which consist of Tony Pua (Petaling Jaya Utara-DAP), Dr Dzulkifli Ahmad (Kuala Selangor-PAS), William Leong (Selayang-PKR) and Charles Santiago (Klang-DAP), also refuted claims that it was the Selangor government that had caused the water talks to break down.
Ahmad Faizal had blamed the Selangor government for delays resulting in the state's water consolidation talks exceeding a year, according to an interview published by an English daily last Saturday.
"It is the federal government's insistence that Syabas remain the concessionaire for water distribution in the state.
"During the negotiations, the state government had even accepted a compromised proposal where Syabas will remain 51% majority shareholder on condition that there would be an independent professional management and equal board representation," said Pua in a press conference in parliament lobby today.
The water panel also slammed the federal government for offering Syabas a way out of its cash flow problems.
"The fact the federal government had been secretly negotiating a RM320 million interest free, unsecured and back loaded loan facility to Syabas serves only to prove the federal government's bad faith in the entire water talks, for while the state government is negotiating hard the terms of the new concession, the federal government is offering Syabas a way out for its major cash flow problems, which removes the incentive for Syabas to deal with the state government," said Pua.
He added that the lack of commitment from the federal government was clear when it refused to use it powers to get Syabas to the negotiating table with the state government.
According to Pua, Section 114 of Water Services Industry Act gives power to the Energy, Green Technology and Water Minister to force water players to hand over the assets for the sake of national interest.
In the said article, Faizal had also disclosed that PAAB would take into account the fact that the concessionaires' "liabilities are much higher than the tangible assets".
"This means the rakyat will have to bear the liabilities of these concessionaires as part of the takeover of water assets," said Pua.
He said PAAB was not consolidating or restructuring the state's fragmented water industry but was purchasing the concessionaires' assets at higher prices while continuing to issue operating and maintenance licences.
Leong meanwhile said PAAB's conduct had deviated from the objective of the Act.
"The objective of the Act is to enable the state government to operate the water concessions. Now this facility has been given to the concessionaires and not the state government," he said.
Santiago added that there was a sense of "regulatory capture" in the water issue where the companies being regulated were determining the outcome.
Asked what the water panel intended to do in the coming weeks, Pua said it would not rule out "necessary actions" on both concessionaires and the federal government should their meetings fail to achieve a result.
PAAB plans better offer to Selangor water concessionaires
STAR, 11 December 2009
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.
Wednesday, June 17, 2009
Review Dual Billing System - WECAM
June 18, 2009
PETALING JAYA, June 18 (Bernama) -- The Water, Energy Consumer Association of Malaysia (WECAM) today called on the government to scrap the flat rate of RM8 per month billing system for sewerage charges on homes because it was unfair to consumers.
Instead the association wants the sewerage bill to be integrated with the water bill based on the usage which could be measured by the meter.
WECAM secretary-general, S. Piarapakaran, explained that the majority of homes used less than RM8 of water to flush their toilet and kitchen wastes as such it was unfair to charge them a flat rate.
"The current separate billing system for water and sewerage should be reviewed," he added.
He said a combined billing system would be more equitable as consumers would pay according to their usage.
Piarapakaran said consumers could save a lot on their water bills if they can recycle waste water from their kitchen to flush their toilets.
They could also harvest rain water for non-drinking purposes.
He said WECAM would conduct awareness clinics to empower consumers on how they can recycle water and reduce their water bill and at the same time help preserve the environment.
-- BERNAMA
PETALING JAYA, June 18 (Bernama) -- The Water, Energy Consumer Association of Malaysia (WECAM) today called on the government to scrap the flat rate of RM8 per month billing system for sewerage charges on homes because it was unfair to consumers.
Instead the association wants the sewerage bill to be integrated with the water bill based on the usage which could be measured by the meter.
WECAM secretary-general, S. Piarapakaran, explained that the majority of homes used less than RM8 of water to flush their toilet and kitchen wastes as such it was unfair to charge them a flat rate.
"The current separate billing system for water and sewerage should be reviewed," he added.
He said a combined billing system would be more equitable as consumers would pay according to their usage.
Piarapakaran said consumers could save a lot on their water bills if they can recycle waste water from their kitchen to flush their toilets.
They could also harvest rain water for non-drinking purposes.
He said WECAM would conduct awareness clinics to empower consumers on how they can recycle water and reduce their water bill and at the same time help preserve the environment.
-- BERNAMA
Monday, March 30, 2009
Restructuring water service
New Straits Times, 31 March 2009
By : Hamidah Atan
PUTRAJAYA: The Federal Government will not discriminate against the opposition-ruled Selangor government in restructuring its water service.
Energy, Water and Communications Minister Datuk Shaziman Abu Mansor said the restructuring model had been well received by the Negri Sembilan and Malacca state governments.
"It must be emphasised that the Selangor restructuring model is the same one used to restructure the Johor water service, which was implemented successfully.
"It must also be emphasised that the Federal Government will not adopt an approach that is discriminatory in nature against Selangor, even though it is under the administration of the opposition."
The ministry had produced booklets to explain to the public the restructuring of the Selangor water service.
Shaziman said the Federal Government would assist Selangor in the restructuring process but with conditions.
Water company Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), owned by the state government through a 30 per cent equity ownership, is licensed under the 2006 Water Service Industry Act (Act 655).
Three concession water treatment companies -- Puncak Niaga Sdn Bhd (PNSB), Konsortium Abass Sdn Bhd (Abass) and Syarikat Pengeluaran Air Selangor Sdn Bhd (Splash) -- are allowed to continue their operations until their concessionary period expire.
"For Syabas, the proposed service licence allows them to implement water service operations and maintenance of assets. This licence needs to be renewed every three year, depending on the level of compliance," Shaziman said.
A condition was that there should not be any hike in water tariff this year.
He said the ministry's primary concern was to ensure a continuous supply of water and keeping the tariffs low.
Any more delays in water restructuring in Selangor would result in cash flow problems and financial defaults among the concessionaires, which would eventually put the state's water supply at risk, he said.
The ministry had allowed the Selangor government deadline extensions to buy over the water companies on its own four times between Sept 19 last year and Feb 14.
The state eventually offered to pay RM5.7 billion for all the water assets but the companies rejected it, mainly because the offer was too low.
By : Hamidah Atan
PUTRAJAYA: The Federal Government will not discriminate against the opposition-ruled Selangor government in restructuring its water service.
Energy, Water and Communications Minister Datuk Shaziman Abu Mansor said the restructuring model had been well received by the Negri Sembilan and Malacca state governments.
"It must be emphasised that the Selangor restructuring model is the same one used to restructure the Johor water service, which was implemented successfully.
"It must also be emphasised that the Federal Government will not adopt an approach that is discriminatory in nature against Selangor, even though it is under the administration of the opposition."
The ministry had produced booklets to explain to the public the restructuring of the Selangor water service.
Shaziman said the Federal Government would assist Selangor in the restructuring process but with conditions.
Water company Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), owned by the state government through a 30 per cent equity ownership, is licensed under the 2006 Water Service Industry Act (Act 655).
Three concession water treatment companies -- Puncak Niaga Sdn Bhd (PNSB), Konsortium Abass Sdn Bhd (Abass) and Syarikat Pengeluaran Air Selangor Sdn Bhd (Splash) -- are allowed to continue their operations until their concessionary period expire.
"For Syabas, the proposed service licence allows them to implement water service operations and maintenance of assets. This licence needs to be renewed every three year, depending on the level of compliance," Shaziman said.
A condition was that there should not be any hike in water tariff this year.
He said the ministry's primary concern was to ensure a continuous supply of water and keeping the tariffs low.
Any more delays in water restructuring in Selangor would result in cash flow problems and financial defaults among the concessionaires, which would eventually put the state's water supply at risk, he said.
The ministry had allowed the Selangor government deadline extensions to buy over the water companies on its own four times between Sept 19 last year and Feb 14.
The state eventually offered to pay RM5.7 billion for all the water assets but the companies rejected it, mainly because the offer was too low.
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.
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.
No hike in water tariffs, Selangor promises
STAR, March 30, 2009
By SIM LEOI LEOI
PETALING JAYA: Selangor has promised to challenge any decision by the federal government to increase its water tariff come Wednesday.
Selangor water review panel member Charles Santiago said this was because any tariff increase needed the state government’s consent.
“The state government is a party to the concessionaire agreements signed with the water companies.
“Although the federal government has the golden share, it will still need our consent if it plans to implement the increase.
“The state government is prepared to challenge the decision in court,” he said Monday.
Asked if Selangor would ask the federal government to defer any tariff increase, set to come into effect on Wednesday under the terms of the original concessionaire, Santiago said there was no need for any postponement.
“We have already given the federal government an offer. Why don’t they look at it?” he asked.
Selangor had earlier proposed to the federal government that the concession with the water companies be terminated as some of the firms had violated their agreements and let the state take over the assets.
However, the federal government had told Selangor that it was not in the position to terminate the agreements.
Santiago was commenting on a statement by Energy, Water and Communications Minister by Datuk Shaziman Abu Mansor that it would put forward a Cabinet paper on the matter of water tariff increase this Wednesday.
Selangor must undertake a water restructuring exercise by Tuesday, failing which tariffs will rise by 37% for 1.5mil consumers in Selangor, Putrajaya and the Federal Territory under the orginal concessionaire agreement.
However, if there is any increase, it should be around 31%, as suggested by the Auditor-General Department.
The federal government had earlier deferred the increase, which was supposed to have taken effect on Jan 1.
It had also written to Selangor, informing it of the increase this Wednesday as well as for the compensation to be paid for the three-month deferment from Dec 31.
“Selangor has responded to the letter where we told the federal government that our original proposal stands,” said Santiago.
When contacted, a senior official with the Selangor Mentri Besar Tan Sri Khalid Ibrahim said he would issue a statement on the matter either Tuesday or Wednesday as the latter was still in Sarawak for the Batang Ai by-election.
“Selangor will disagree with any tariff increase. This shouldn’t have happened and we have a legal basis for our views,” said the official.
Forum Air Malaysia secretary Piara Pakaran Subramaniam said that, with just a day to go before the increase, none of the consumer groups in its coalition had been briefed on the progress or whether consumers would be spared the tariff increase.
“Whatever it is, we want the tariff increase put off until the matter of the takeover of Selangor water assets has been resolved as now will not be a good time to raise the rates.
“There should also not be any disruption to the water supply to consumers. We want the federal government to step in and postpone the increase,” he said, calling for federal and the state governments to put aside their political differences to discuss the matter.
When contacted, a spokesman at the National Water Services Commission asked for queries to be directed to the Energy, Water and Communications Ministry.
By SIM LEOI LEOI
PETALING JAYA: Selangor has promised to challenge any decision by the federal government to increase its water tariff come Wednesday.
Selangor water review panel member Charles Santiago said this was because any tariff increase needed the state government’s consent.
“The state government is a party to the concessionaire agreements signed with the water companies.
“Although the federal government has the golden share, it will still need our consent if it plans to implement the increase.
“The state government is prepared to challenge the decision in court,” he said Monday.
Asked if Selangor would ask the federal government to defer any tariff increase, set to come into effect on Wednesday under the terms of the original concessionaire, Santiago said there was no need for any postponement.
“We have already given the federal government an offer. Why don’t they look at it?” he asked.
Selangor had earlier proposed to the federal government that the concession with the water companies be terminated as some of the firms had violated their agreements and let the state take over the assets.
However, the federal government had told Selangor that it was not in the position to terminate the agreements.
Santiago was commenting on a statement by Energy, Water and Communications Minister by Datuk Shaziman Abu Mansor that it would put forward a Cabinet paper on the matter of water tariff increase this Wednesday.
Selangor must undertake a water restructuring exercise by Tuesday, failing which tariffs will rise by 37% for 1.5mil consumers in Selangor, Putrajaya and the Federal Territory under the orginal concessionaire agreement.
However, if there is any increase, it should be around 31%, as suggested by the Auditor-General Department.
The federal government had earlier deferred the increase, which was supposed to have taken effect on Jan 1.
It had also written to Selangor, informing it of the increase this Wednesday as well as for the compensation to be paid for the three-month deferment from Dec 31.
“Selangor has responded to the letter where we told the federal government that our original proposal stands,” said Santiago.
When contacted, a senior official with the Selangor Mentri Besar Tan Sri Khalid Ibrahim said he would issue a statement on the matter either Tuesday or Wednesday as the latter was still in Sarawak for the Batang Ai by-election.
“Selangor will disagree with any tariff increase. This shouldn’t have happened and we have a legal basis for our views,” said the official.
Forum Air Malaysia secretary Piara Pakaran Subramaniam said that, with just a day to go before the increase, none of the consumer groups in its coalition had been briefed on the progress or whether consumers would be spared the tariff increase.
“Whatever it is, we want the tariff increase put off until the matter of the takeover of Selangor water assets has been resolved as now will not be a good time to raise the rates.
“There should also not be any disruption to the water supply to consumers. We want the federal government to step in and postpone the increase,” he said, calling for federal and the state governments to put aside their political differences to discuss the matter.
When contacted, a spokesman at the National Water Services Commission asked for queries to be directed to the Energy, Water and Communications Ministry.
Selangor Water Issue To Be Referred To Cabinet
BERNAMA, March 30, 2009
KUALA LUMPUR, MAR 30 (Bernama)-- The unresolved issue of the Selangor Government's proposal to restructure the water industry in the state will now be referred to the Cabinet for a decision.
Energy, Water and Communications Minister, Datuk Shahziman Abu Mansor, said a paper on the issue has been prepared and would be tabled at the Cabinet meeting on Wednesday.
The contents of the paper were not revealed.
He said the Federal Government was concerned as the unresolved issue would entail a penalty whereby some 1.5 million consumers in Selangor, Kuala Lumpur and Putrajaya would have to pay an extra 37 per cent in water tariff.
This is because of the existing 30-year agreements between the state government and the four water concessioners in the state -- SYABAS, Puncak Niaga, SPLASH and Abas -- which expire in 2034, allow a tariff increase periodically.
The latest was supposed to be on Jan. 1, 2009
The present average tariff is RM1.39 per cu metre and this would be increased to RM1.90
However, this was deferred to March 31, as the Selangor Government has proposed to buy over the assets of all the four concessioners thereby automatically abrogating the agreements and taking over the management of the water industry in the state and thus restrucuring its tariffs.
Negotiations between the parties were now stalled as they were not agreeable to the quantum of the payment for the assets which included main pipes, water treatment plants and water catchment areas.
The state government has offered RM5.1 billion for the assets.
Shahziman said the Federal Government was still open to any counter proposals.
"The ball is now in the state government's court," he added
Meanwhile, the Malaysian Water Forum, a non-government organisation, hoped that there would be no tariff increase while negotiations were on-going.
Its secretary-general, S. Piarapakaran, told Bernama the issue was causing much concern to consumers as they were afraid of an increase which would burden them especially during the economic downturn.
He said the Forum wanted the Federal Government to take over the assests through the Pengurusan Aset Air Bhd, a company under the Finance Minister Inc.
Piarapakaran said Johor, which also faced the same predicament as Selangor, managed to resolve it.
"We are sure if Selangor is sincere in wanting to resolve the issue, it can be done," he said.
-- BERNAMA
KUALA LUMPUR, MAR 30 (Bernama)-- The unresolved issue of the Selangor Government's proposal to restructure the water industry in the state will now be referred to the Cabinet for a decision.
Energy, Water and Communications Minister, Datuk Shahziman Abu Mansor, said a paper on the issue has been prepared and would be tabled at the Cabinet meeting on Wednesday.
The contents of the paper were not revealed.
He said the Federal Government was concerned as the unresolved issue would entail a penalty whereby some 1.5 million consumers in Selangor, Kuala Lumpur and Putrajaya would have to pay an extra 37 per cent in water tariff.
This is because of the existing 30-year agreements between the state government and the four water concessioners in the state -- SYABAS, Puncak Niaga, SPLASH and Abas -- which expire in 2034, allow a tariff increase periodically.
The latest was supposed to be on Jan. 1, 2009
The present average tariff is RM1.39 per cu metre and this would be increased to RM1.90
However, this was deferred to March 31, as the Selangor Government has proposed to buy over the assets of all the four concessioners thereby automatically abrogating the agreements and taking over the management of the water industry in the state and thus restrucuring its tariffs.
Negotiations between the parties were now stalled as they were not agreeable to the quantum of the payment for the assets which included main pipes, water treatment plants and water catchment areas.
The state government has offered RM5.1 billion for the assets.
Shahziman said the Federal Government was still open to any counter proposals.
"The ball is now in the state government's court," he added
Meanwhile, the Malaysian Water Forum, a non-government organisation, hoped that there would be no tariff increase while negotiations were on-going.
Its secretary-general, S. Piarapakaran, told Bernama the issue was causing much concern to consumers as they were afraid of an increase which would burden them especially during the economic downturn.
He said the Forum wanted the Federal Government to take over the assests through the Pengurusan Aset Air Bhd, a company under the Finance Minister Inc.
Piarapakaran said Johor, which also faced the same predicament as Selangor, managed to resolve it.
"We are sure if Selangor is sincere in wanting to resolve the issue, it can be done," he said.
-- BERNAMA
Wednesday, March 4, 2009
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
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
Sunday, March 1, 2009
Water restructuring in S’gor should not be money-making
STAR, March 1, 2009
By ZALINAH NOORDIN
PETALING JAYA: Restructuring efforts of the water services industry in Selangor should not be a money-making process, said Bar Council vice-president Ragunath Kesavan.
Instead, the State Government and the Federal Government should seek ways to resolve the matter in the best interest of the public. He was referring to the 37percent tariff hike should the issue not be settled before March 31.
“Both parties must sit down and discuss this, as the most important thing is whether they can provide the best service at the best cost,” he said.
Kesavan said that the public should be involved in the whole process. He added that when the industry was privatised, there was no proper tender system and this had led to the current disarray.
“The Federal Government, not the State Government, should have led the negotiations for the re-nationalisation of the water assets from the start.
“This is how it’s done in most other states that have embarked on this venture, like Malacca and Negri Sembilan,” he said.
The current situation leaves either consumers burdened with a higher water bill in such difficult times or the State Government pays some RM38mil a month to compensate the concessionaires, he said.
The four concessionaires; Syarikat Bekalan Air Selangor (Syabas), Puncak Niaga (M) Sdn Bhd, Syarikan Pengeluar Air Selangor Sdn Bhd and Konsortium ABBAS Sdn Bhd also have different takes on the matter.
The first three companies had rejected the state’s offer of RM4.6bil for all the water assets owned by them citing it was too low an offer.
Meanwhile, PJ Utara MP Tony Pua, who is also a member of Selangor’s Water Review Panel, shared the same view on the general unawareness of the public in Selangor regarding the water issue.
“They should be made aware of the situation and they too should take note as it will affect them should there be an increase in their bills,” he said.
He added that the review panel would hold more briefing sessions in various areas of Selangor to disseminate information on the issue.
“Their opinions should also be accounted for as they are the ones who will have to live with the changes,” added Pua.
According to him, by the end of 2013, water tariffs in Selangor could be decreased as much as 25% if the state took over the water industry.
Not only would the 20 cubic metres of free water remain but there would be a 10% decrease in tariff this year.
This would be followed by a 20% decrease in the second term in 2011, and a further 25% decrease during the third term in 2013.
“Look at Penang. We should really emulate them as it has one of the lowest water rates in the country and the State Government is running the show,” he said.
Pua said that the Federal Government’s offer to buy over all the water assets from the four water concessionaires in Selangor shows that they only have sympathy for the concessionaires and not the Selangor people.
“Of course their reason would be that the companies have invested billions of ringgit in providing water supply in Selangor and not doing well but what about people having to pay more?” claimed Pua.
By ZALINAH NOORDIN
PETALING JAYA: Restructuring efforts of the water services industry in Selangor should not be a money-making process, said Bar Council vice-president Ragunath Kesavan.
Instead, the State Government and the Federal Government should seek ways to resolve the matter in the best interest of the public. He was referring to the 37percent tariff hike should the issue not be settled before March 31.
“Both parties must sit down and discuss this, as the most important thing is whether they can provide the best service at the best cost,” he said.
Kesavan said that the public should be involved in the whole process. He added that when the industry was privatised, there was no proper tender system and this had led to the current disarray.
“The Federal Government, not the State Government, should have led the negotiations for the re-nationalisation of the water assets from the start.
“This is how it’s done in most other states that have embarked on this venture, like Malacca and Negri Sembilan,” he said.
The current situation leaves either consumers burdened with a higher water bill in such difficult times or the State Government pays some RM38mil a month to compensate the concessionaires, he said.
The four concessionaires; Syarikat Bekalan Air Selangor (Syabas), Puncak Niaga (M) Sdn Bhd, Syarikan Pengeluar Air Selangor Sdn Bhd and Konsortium ABBAS Sdn Bhd also have different takes on the matter.
The first three companies had rejected the state’s offer of RM4.6bil for all the water assets owned by them citing it was too low an offer.
Meanwhile, PJ Utara MP Tony Pua, who is also a member of Selangor’s Water Review Panel, shared the same view on the general unawareness of the public in Selangor regarding the water issue.
“They should be made aware of the situation and they too should take note as it will affect them should there be an increase in their bills,” he said.
He added that the review panel would hold more briefing sessions in various areas of Selangor to disseminate information on the issue.
“Their opinions should also be accounted for as they are the ones who will have to live with the changes,” added Pua.
According to him, by the end of 2013, water tariffs in Selangor could be decreased as much as 25% if the state took over the water industry.
Not only would the 20 cubic metres of free water remain but there would be a 10% decrease in tariff this year.
This would be followed by a 20% decrease in the second term in 2011, and a further 25% decrease during the third term in 2013.
“Look at Penang. We should really emulate them as it has one of the lowest water rates in the country and the State Government is running the show,” he said.
Pua said that the Federal Government’s offer to buy over all the water assets from the four water concessionaires in Selangor shows that they only have sympathy for the concessionaires and not the Selangor people.
“Of course their reason would be that the companies have invested billions of ringgit in providing water supply in Selangor and not doing well but what about people having to pay more?” claimed Pua.
Panel claims Selangor water tariffs can be reduced by 25%
STAR, February 27, 2009
SHAH ALAM: By the end of 2013, water tariffs in Selangor can be decreased as much as 25% if the state takes over the water sector, said a review panel appointed by the state government.
Not only would the 20 cubic metres of free water remain; but there would be a 10% decrease in tariff this year, panel member and PJ Utara MP Tony Pua told a media briefing yesterday.
This would be followed by a 20% decrease in the second term in 2011, and a further 25% decrease during the third term in 2013.
Other panel members were Klang MP Charles Santiago, academic Dr Subramaniam Pillay, lawyer Fahda Nur Ahmad Kamar and Selayang MP William Leong.
Santiago said eliminating excess spending by the state allowed for the water tariff to go down.
The panel also said the Federal Government, having initiated direct talks with the four water concessionaires in the state, must not exclude the state government which owned 70% to 80% of Selangor’s water assets.
Meanwhile, at a separate function, Syabas executive chairman Tan Sri Rozali Ismail, when asked about his alleged seven-figure remuneration, said: “If they want professionals to run the company, they will have to pay.”
He was speaking to reporters after signing a Memorandum of Understanding between Syabas and the Construction Industrial Development Board yesterday.
SHAH ALAM: By the end of 2013, water tariffs in Selangor can be decreased as much as 25% if the state takes over the water sector, said a review panel appointed by the state government.
Not only would the 20 cubic metres of free water remain; but there would be a 10% decrease in tariff this year, panel member and PJ Utara MP Tony Pua told a media briefing yesterday.
This would be followed by a 20% decrease in the second term in 2011, and a further 25% decrease during the third term in 2013.
Other panel members were Klang MP Charles Santiago, academic Dr Subramaniam Pillay, lawyer Fahda Nur Ahmad Kamar and Selayang MP William Leong.
Santiago said eliminating excess spending by the state allowed for the water tariff to go down.
The panel also said the Federal Government, having initiated direct talks with the four water concessionaires in the state, must not exclude the state government which owned 70% to 80% of Selangor’s water assets.
Meanwhile, at a separate function, Syabas executive chairman Tan Sri Rozali Ismail, when asked about his alleged seven-figure remuneration, said: “If they want professionals to run the company, they will have to pay.”
He was speaking to reporters after signing a Memorandum of Understanding between Syabas and the Construction Industrial Development Board yesterday.
Selangor yet to negotiate with federal govt on water
BERNAMA, February 26, 2009
SHAH ALAM: The water review panel, formed by the Selangor Government to review the restructuring of the water industry in the state, has yet to begin negotiations with the Federal Goverment for the acquisition of its water assets.
One of the panel members, Prof Dr Subramaniam Pillay, told a media briefing that the Federal Government had not met the panel to negotiate the take over of the state assets in the industry, that is, piping systems and 27 treatment plants worth about RM9 billion.
The water industry concessionaires in Selangor, namely Puncak Niaga (M) Sdn Bhd and Syarikat Pengeluaran Air Selangor Sdn Bhd (SPLASH), each own a water treatment plant in the state, said Pillay who is associate professor at the Nottingham University campus in Malaysia.
At the moment, Pengurusan Aset Air Bhd (PAAB) has moved in to negotiate directly with the four water concessionaires in the state, namely Puncak Niaga, SPLASH, Syarikat Bekalan Air Selangor Sdn Bhd (SYABAs) and Konsortium ABASS Sdn Bhd (Abass) in the restructuring of the water industry.
Under the initial restructuring plan, the Selangor Government via state controlled company, Kumpulan Darul Ehsan Bhd (KDEB), will take over the concessions and the assets to hand them 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, as after the restructuring, there would be no more concessionaire, but a licence issued to the operator, subject to a review by the Federal Goverment within certain number of years, he said.
The existing four concessionaires had also rejected an offer by the state government to take over their assets and concessions for RM5.7 billion (RM1.1 billion for concessions and RM4.6 billion for assets) on Feb 20, this year, he said.
Among the reasons cited in a news report was that the offer was lower than their expectations.
However, another member panel, Tony Pua, said the state government believed that if it was given the licence to be the sole operator of the industry, it could provide cheaper water tariff to the public, due to the existing economies of scale in Selangor and maintain the free water policy for the first 20 cubic metre.
At present, the average price per cubic metre of water in Selangor for domestic use was 77sen, and this year, with the existing economies of scale in Selangor, the water tariff could be brought down by 10 percent to 69sen, and by 25 percent to 57sen in 2013, said Pua, who is also Petaling Jaya Utara assemblyman and a corporate lawyer.
He said this could be done through better management of the water industry, adding that Penang, which is smaller than Selangor, had proved it could supply water for domestic use at 37sen per cubic metre.
Should the state government fail to hand over its water assets to PAAB by March 31, this year, the water tariff could shoot up by 37percent.
There is also talk that SYABAS would likely get the licence if the Federal Government took over the state water assets, said Pua. - Bernama
SHAH ALAM: The water review panel, formed by the Selangor Government to review the restructuring of the water industry in the state, has yet to begin negotiations with the Federal Goverment for the acquisition of its water assets.
One of the panel members, Prof Dr Subramaniam Pillay, told a media briefing that the Federal Government had not met the panel to negotiate the take over of the state assets in the industry, that is, piping systems and 27 treatment plants worth about RM9 billion.
The water industry concessionaires in Selangor, namely Puncak Niaga (M) Sdn Bhd and Syarikat Pengeluaran Air Selangor Sdn Bhd (SPLASH), each own a water treatment plant in the state, said Pillay who is associate professor at the Nottingham University campus in Malaysia.
At the moment, Pengurusan Aset Air Bhd (PAAB) has moved in to negotiate directly with the four water concessionaires in the state, namely Puncak Niaga, SPLASH, Syarikat Bekalan Air Selangor Sdn Bhd (SYABAs) and Konsortium ABASS Sdn Bhd (Abass) in the restructuring of the water industry.
Under the initial restructuring plan, the Selangor Government via state controlled company, Kumpulan Darul Ehsan Bhd (KDEB), will take over the concessions and the assets to hand them 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, as after the restructuring, there would be no more concessionaire, but a licence issued to the operator, subject to a review by the Federal Goverment within certain number of years, he said.
The existing four concessionaires had also rejected an offer by the state government to take over their assets and concessions for RM5.7 billion (RM1.1 billion for concessions and RM4.6 billion for assets) on Feb 20, this year, he said.
Among the reasons cited in a news report was that the offer was lower than their expectations.
However, another member panel, Tony Pua, said the state government believed that if it was given the licence to be the sole operator of the industry, it could provide cheaper water tariff to the public, due to the existing economies of scale in Selangor and maintain the free water policy for the first 20 cubic metre.
At present, the average price per cubic metre of water in Selangor for domestic use was 77sen, and this year, with the existing economies of scale in Selangor, the water tariff could be brought down by 10 percent to 69sen, and by 25 percent to 57sen in 2013, said Pua, who is also Petaling Jaya Utara assemblyman and a corporate lawyer.
He said this could be done through better management of the water industry, adding that Penang, which is smaller than Selangor, had proved it could supply water for domestic use at 37sen per cubic metre.
Should the state government fail to hand over its water assets to PAAB by March 31, this year, the water tariff could shoot up by 37percent.
There is also talk that SYABAS would likely get the licence if the Federal Government took over the state water assets, said Pua. - Bernama
Thursday, February 19, 2009
PAAB starts talks with Selangor concessionaires
STAR, 19 February 2009
By YEOW POOI LING
KUALA LUMPUR: Pengurusan Aset Air Bhd (PAAB) has “moved in” to negotiate directly with the water concessionaires in Selangor to take over their assets as part of the initiative to restructure water services in the country.
According to National Water Services Commission (SPAN) chief executive officer Datuk Teo Yen Hua, the Selangor government had failed to meet the deadline given by the Federal Government although it had been extended twice after the first deadline of end September last year.
“The Federal Government had then given the state government until Feb 14 to submit an offer for the takeover of the water assets and equities, but up to today, there has been no response,” he told a press conference yesterday.
“It’s been too long and time is of essence. It’s only appropriate for PAAB to move in and resolve the issue,” he added.
Teo said there was no offer on the table yet for the water assets as PAAB had only started “looking at the books.”
Under the initial restructuring plan, the Selangor government, via its investment arm Kumpulan Darul Ehsan Bhd (KDEB), would consolidate the concessions, following which it would hand over the water assets to PAAB.
The assets would then be leased back to KDEB as the sole concessionaire. The Ministry of Energy, Water and Communications has ordered the restructuring to be completed by end March.
Should the state government fail to hand over the water assets to PAAB by then, consumers would risk paying water tariff that is 37% higher.
However, only last Friday, did Kumpulan Perangsang Selangor Bhd (KPS), which is the subsidiary of KDEB, initiate the move to restructure via an offer for some RM6bil for the four water concessions.
Puncak Niaga Holdings Bhd was offered RM3.1bil for its water assets and operations as well as those of its 70% sub-subsidiary Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) without assuming any liabilities.
Gamuda Bhd’s 40% own unit, Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash), was offered RM2.1bil without liabilities while KPS’ own Konsortium Abass Sdn Bhd was offered RM525.7mil.
The concessionaires have until tomorrow to respond to their respective offer but news reports so far have indicated that the offers were unattractive.
Teo said if the negotiations between PAAB and the concessionaires failed to meet the March deadline, a higher tariff would be imposed.
On the state government’s request for the Energy, Water and Communications Minister to intervene in the restructuring, Teo said it was unnecessary.
“Concessionaires have the option of either migrating to licensing or continuing the concessions based on new terms set by SPAN. We have not gone through that process. If the concessionaires refuse to come forward for renegotiations, SPAN will advise the minister accordingly,” he said.
By YEOW POOI LING
KUALA LUMPUR: Pengurusan Aset Air Bhd (PAAB) has “moved in” to negotiate directly with the water concessionaires in Selangor to take over their assets as part of the initiative to restructure water services in the country.
According to National Water Services Commission (SPAN) chief executive officer Datuk Teo Yen Hua, the Selangor government had failed to meet the deadline given by the Federal Government although it had been extended twice after the first deadline of end September last year.
“The Federal Government had then given the state government until Feb 14 to submit an offer for the takeover of the water assets and equities, but up to today, there has been no response,” he told a press conference yesterday.
“It’s been too long and time is of essence. It’s only appropriate for PAAB to move in and resolve the issue,” he added.
Teo said there was no offer on the table yet for the water assets as PAAB had only started “looking at the books.”
Under the initial restructuring plan, the Selangor government, via its investment arm Kumpulan Darul Ehsan Bhd (KDEB), would consolidate the concessions, following which it would hand over the water assets to PAAB.
The assets would then be leased back to KDEB as the sole concessionaire. The Ministry of Energy, Water and Communications has ordered the restructuring to be completed by end March.
Should the state government fail to hand over the water assets to PAAB by then, consumers would risk paying water tariff that is 37% higher.
However, only last Friday, did Kumpulan Perangsang Selangor Bhd (KPS), which is the subsidiary of KDEB, initiate the move to restructure via an offer for some RM6bil for the four water concessions.
Puncak Niaga Holdings Bhd was offered RM3.1bil for its water assets and operations as well as those of its 70% sub-subsidiary Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) without assuming any liabilities.
Gamuda Bhd’s 40% own unit, Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash), was offered RM2.1bil without liabilities while KPS’ own Konsortium Abass Sdn Bhd was offered RM525.7mil.
The concessionaires have until tomorrow to respond to their respective offer but news reports so far have indicated that the offers were unattractive.
Teo said if the negotiations between PAAB and the concessionaires failed to meet the March deadline, a higher tariff would be imposed.
On the state government’s request for the Energy, Water and Communications Minister to intervene in the restructuring, Teo said it was unnecessary.
“Concessionaires have the option of either migrating to licensing or continuing the concessions based on new terms set by SPAN. We have not gone through that process. If the concessionaires refuse to come forward for renegotiations, SPAN will advise the minister accordingly,” he said.
SPAN's decision to negotiate directly with concessionaires unwarranted
Edge Daily, 19 February 2009
by Yong Min Wei
KUALA LUMPUR: The Selangor state government has described as unwarranted the decision by Suruhanjaya Perkhidmatan Air Negara (SPAN) to negotiate directly with the four concession companies to acquire their water treatment and distribution assets as part of the water restructuring exercise in the state.
Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim said the move by SPAN was inconsistent with the Federal Government's decision on Jan 16, 2008, to allow the state government, through Kumpulan Darul Ehsan Bhd (KDEB), to take over the operation and maintenance of the water assets from concessionaires in a joint exercise.
"It has therefore come as a shock to learn that SPAN is embarking on an obvious U-Turn to the Federal Government's earlier decision - even before our letters of offer to the concessionaries dated Feb 13, 2009, are set to expire Feb 20, 2009," he told a press conference at the parliament lobby yesterday.
The main concession holders in Selangor are Puncak Niaga (M) Sdn Bhd (PNSB), Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) and Konsortium Abbas Sdn Bhd.
He pointed out that should the SPAN be successful in its negotiations, the concessionaires would subsequently enter into a sale and leaseback of the water treatment and distribution assets from Pengurusan Aset Air Bhd (PAAB).
"The Selangor state government questions the decision made by SPAN on a matter that falls under the jurisdiction of the Ministry of Energy, Water and Communications," he said.
He also said the state had taken all efforts to ensure the restructuring exercise is completed with the benefits of the people of Selangor and Kuala Lumpur prior to SPAN's latest move, adding that SPAN has acted inconsistently with the spirit of the Water Services Industry Act 2006 (WSIA).
According to Khalid, Section 191(4) of the WSIA required the concession companies to negotiate with both the Federal Government and the Selangor Government in its capacity as a counter party to each of the concession agreements and supplementary agreements.
He slammed SPAN for not supporting the state government's initiative to buyback these water concessions in the interest of the rakyat with a fair offer, noting that SPAN's chief executive officer Datuk Teo Yen Hua appeared to be pandering towards the interest of the private concessionaires.
"We urge that he (Teo) declares his interest on the matter. If any irregularity is found, we call for his resignation," he stressed.
On the possibility that water tariffs would be lower should PAAB acquire the water assets, Khalid replied: "If they (SPAN) think they can negotiate on behalf of Selangor at a very much lower price, then tell us and we will work behind him (Teo)."
He said the state was only doing what was appropriate under the international standards of takeovers, where a due diligence study must be done and a reasonable offer as well as sufficient time be given to the parties for consideration.
"I don't think when you do a takeover today, you say [that] tomorrow I [can] cancel the arrangement," he noted.
In an announcement to Bursa Malaysia last week, Puncak Niaga had stated that it had received an offer of RM3.1 billion for its assets - namely RM1.6 billion for PNSB and RM1.5 billion for Syabas, excluding the debts accumulated.
Khalid said the offer by the state was reasonable as it was more than the value of assets, such as treatment plants and pipes. He added that the state also provided an exit value that is not tangible.
"If you pass it to PAAB, then the intangible cost or price will have to be translated by the state," he said.
"What happens if PAAB says I pay RM2 and I want to claim from the state RM3 as a result of poor negotiations?" he asked.
by Yong Min Wei
KUALA LUMPUR: The Selangor state government has described as unwarranted the decision by Suruhanjaya Perkhidmatan Air Negara (SPAN) to negotiate directly with the four concession companies to acquire their water treatment and distribution assets as part of the water restructuring exercise in the state.
Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim said the move by SPAN was inconsistent with the Federal Government's decision on Jan 16, 2008, to allow the state government, through Kumpulan Darul Ehsan Bhd (KDEB), to take over the operation and maintenance of the water assets from concessionaires in a joint exercise.
"It has therefore come as a shock to learn that SPAN is embarking on an obvious U-Turn to the Federal Government's earlier decision - even before our letters of offer to the concessionaries dated Feb 13, 2009, are set to expire Feb 20, 2009," he told a press conference at the parliament lobby yesterday.
The main concession holders in Selangor are Puncak Niaga (M) Sdn Bhd (PNSB), Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) and Konsortium Abbas Sdn Bhd.
He pointed out that should the SPAN be successful in its negotiations, the concessionaires would subsequently enter into a sale and leaseback of the water treatment and distribution assets from Pengurusan Aset Air Bhd (PAAB).
"The Selangor state government questions the decision made by SPAN on a matter that falls under the jurisdiction of the Ministry of Energy, Water and Communications," he said.
He also said the state had taken all efforts to ensure the restructuring exercise is completed with the benefits of the people of Selangor and Kuala Lumpur prior to SPAN's latest move, adding that SPAN has acted inconsistently with the spirit of the Water Services Industry Act 2006 (WSIA).
According to Khalid, Section 191(4) of the WSIA required the concession companies to negotiate with both the Federal Government and the Selangor Government in its capacity as a counter party to each of the concession agreements and supplementary agreements.
He slammed SPAN for not supporting the state government's initiative to buyback these water concessions in the interest of the rakyat with a fair offer, noting that SPAN's chief executive officer Datuk Teo Yen Hua appeared to be pandering towards the interest of the private concessionaires.
"We urge that he (Teo) declares his interest on the matter. If any irregularity is found, we call for his resignation," he stressed.
On the possibility that water tariffs would be lower should PAAB acquire the water assets, Khalid replied: "If they (SPAN) think they can negotiate on behalf of Selangor at a very much lower price, then tell us and we will work behind him (Teo)."
He said the state was only doing what was appropriate under the international standards of takeovers, where a due diligence study must be done and a reasonable offer as well as sufficient time be given to the parties for consideration.
"I don't think when you do a takeover today, you say [that] tomorrow I [can] cancel the arrangement," he noted.
In an announcement to Bursa Malaysia last week, Puncak Niaga had stated that it had received an offer of RM3.1 billion for its assets - namely RM1.6 billion for PNSB and RM1.5 billion for Syabas, excluding the debts accumulated.
Khalid said the offer by the state was reasonable as it was more than the value of assets, such as treatment plants and pipes. He added that the state also provided an exit value that is not tangible.
"If you pass it to PAAB, then the intangible cost or price will have to be translated by the state," he said.
"What happens if PAAB says I pay RM2 and I want to claim from the state RM3 as a result of poor negotiations?" he asked.
Subscribe to:
Posts (Atom)