RM151 million loan from Federal Government to Syabas
For this loan to be extended when extensive negotiations are taking place will surely strengthen the bargaining power of Syabas to press for a higher takeover price from the state and delay any deal from happening soon. Any sensible government would have taken the opportunity to pressure Syabas to “settle” the impasse before granting any financial favours.
Tony Pua
Yesterday, Puncak Niaga Holdings Bhd announced that the Federal Government has extended a further RM151 million of soft loans to its subsidiary Syarikat Bekalan Air Selangor (SYABAS) purportedly to replace old and critical pipes in Selangor, Kuala Lumpur and Putrajaya and to reduce non-revenue water losses in the state, which is among the highest in the country.
SYABAS is given a 3-year grace period to commence the repayment of the above loans and will be charged a subsidised interest rate of only 3%. The above amount comes just 8 months after a RM120 million soft loan was extended to the company in February to carry out the same works.
Even before this, the Federal Government has also given generous helping hands to Syabas with a RM320.8 million zero-interest soft loan and RM110 million credit facility in December 2009 and October 2011 respectively.
To top it all off, the Federal Government took over all of the outstanding debt of Syabas amounting to RM2.9 billion which was due and the company was unable to repay in 2011, effectively bailing out the cash constricted concessionaire. These means that Syabas has benefited from a total of RM3.6 billion of tax-payer’s money in the form of grants and loans to save the company from collapse since December 2009.
The question needs to be asked as to why the BN Government is persistent in extending these hundreds of millions of ringgit of annual credit facilities to Syabas despite the latter’s obvious failure to provide quality water services to the public as demanded on the the water concession agreement signed in 2004?
It should be emphasized that under the Water Concession Agreement, there is absolutely no obligation by the federal and state government to provide financial grants or loans for Syabas to carry out its obligations to upgrade all the required water infrastructure to fulfil its obligations to provide quality water services to the people of Selangor and KL. That means that the RM3.6 billion extended to Syabas is done entirely out of the kindness of the BN Government to save a private concessionaire.
The latest RM151 million worth of loans is also a sign of Syabas’ financial desperation as negotiations are already underway between the Federal and Selangor Government together with Syabas. For this loan to be extended when extensive negotiations are taking place will surely strengthen the bargaining power of Syabas to press for a higher takeover price from the state and delay any deal from happening soon. Any sensible government would have taken the opportunity to pressure Syabas to “settle” the impasse before granting any financial favours.
What is worse is that the Federal Government, despite being desperate for cash due to the double debt and deficit crisis, continues to use tax-payers’ monies wantonly to rescue BN’s crony companies. By right if Syabas fails to perform its obligations to upgrade and maintain its water pipes to provide quality water services as agreed under the concession agreement, the Federal Government should sue the company for compensation or terminate the agreement for default.
However in Malaysia, despite telling ordinary Malaysians that subsidies need to be cut and more taxes needs to be collected, crony companies continues to enjoy the implicit government guarantee from financial distress. It is rubbing salt to the rakyat’s wounds when Puncak Niaga Holdings Bhd which can afford to pay its Chairman Tan Sri Rozali Ismail a whopping RM33 million in fees and bonus for 2013, needs to beg for RM151 million from the government to carry out its obligations under the Water Concession Agreement.
