Federal government to cut Selangor out of water deal
Plans are afoot to hand over control of water services in Selangor to Puncak Niaga.
The move comes on the back of all four concessionaires rejecting the combined RM5.7 billion takeover offer by the state government in the ongoing tussle for control of water services in the Klang Valley.
The federal government looks set to close out a deal with the concessionaires before a 30 per cent tariff hike takes effect on April 1 under the concession agreement with Syabas, which is 70 per cent owned by Puncak Niaga.
However, Puncak Niaga is set to take over two fellow players, Splash and Abass, to make it the sole option to be appointed as the licensee for water services for over 1.5 million customers in Selangor, Kuala Kumpur and Putrajaya once the statutory transfer of all water assets in the Klang Valley has been completed.
Selangor had cried foul over the move by the National Water Services Commission (Span), the regulatory body under the Ministry of Water, Energy and Communications, to declare that the federal government would commence negotiations with the concessionaires two days before the Feb 20 deadline for the companies to accept the state's offer.
It claims that the move had effectively made Pengurusan Aset Air Berhad (PAAB), the wholly-owned subsidiary of the Finance Ministry created under the Water Services Industry Act to consolidate all water assets in the peninsula, a competitor in the acquisition of the privately held water assets.
After acquiring the assets, the federal government is given the power under the law to appoint a licensee in each state to whom it will lease back the assets so it can operate water services.
A member of the Selangor water review panel, which has been overseeing the deal for the state, told The Malaysian Insider that its move to take over all four concessionaires was a strategy to leave the federal government with no option but to appoint a state-controlled company as the licensee.
Sources say that with the scuppering of Selangor's RM5.7 billion offer, Puncak Niaga will now meet Splash and Abass within a week to agree a takeover deal in principle while PAAB will make an offer for all the privately held water assets.
The Malaysian Insider understands that the PAAB offer may be up to RM500 million less than Selangor's, giving it the appearance of being a better deal but it will not include taking over equity, which instead will be bought up by Puncak Niaga.
But Selangor still holds some significant cards. It owns 80 per cent of water assets and could hold out until a compromise is reached.
However, with the tariff hike hanging over its constituents, the Pakatan Rakyat government knows that it is a stalemate that could hurt it politically.
It had tried to delay the tariff hike by demanding that the ministry revoke Syabas' 30-year concession due to non-compliance as found in a report by the National Audit Department, which includes exceeding capital expenditure allowances and engaging in direct negotiations instead of open tenders.
However, the ministry responded by forwarding the matter to the Attorney-General and pressing Selangor to move ahead with the restructuring of assets.
