Selangor water deal suspect, possibly illegal, says PKR’s Rafizi

(MM) – The hastily-signed water deal between Selangor and Putrajaya was not only lopsided and possibly illegal, but will inevitably lead to a spike in water tariffs statewide, PKR’s Rafizi Ramli alleged today.

The PKR chief strategist said such deals must be presented to the state executive council before they are agreed and cannot be left to the unilateral decision of the state chief minister.

“The state power is vested in the exco,” he told The Malay Mail Online.

“So when they went to sign (the Memorandum of Understanding) without being tabled at the exco, legality is suspect,” he said, adding that details of the MoU were only finalised one hour before its signing.

Rafizi said other discrepancies in the MoU also led him to believe that the deal was not only rushed through without proper thought but could eventually backfire on the state government, affecting consumers.

In a statement, the Pandan MP said it was “a matter of conscience” that he found it necessary to reveal the flaws in the the MoU, which was signed hastily last Wednesday between embattled Mentri Besar Tan Sri Khalid Ibrahim and Green Technology Minister Datuk Seri Dr Maximus Ongkili at an event in Putrajaya

Under the MoU, Selangor will take over the operations of four water concessionaires — Syarikat Bekalan Air Selangor Bhd (Syabas), Puncak Niaga Sdn Bhd (PNSB), Konsortium Abbas Sdn Bhd and Syarikat Pengeluar Air Selangor Holdings Bhd (Splash) — for RM9.65 billion, and will place these under the state-owned Kumpulan Darul Ehsan Sdn Bhd (KDEB).

The agreement states that the water management companies have until March 10, 2014, to accept KDEB’s offer.

Rafizi said the state government’s takeover of water assets would be funded by federal- government-backed bonds.

“In other words, it is akin to a debt owed by the federal government to the concessionaires,” he added.

The deal also says that the land and water assets will be leased back to the state’s water supply operators. And in order to meet debt obligations arising from the bond issuance, the rental rates on the lease may have to rise.

The higher rental would translate into higher water tariffs, he predicted.

Rafizi also said the deal was lopsided, citing key terms that only bind the state government.

According to the MoU, construction of the long-opposed Langat 2 treatment plant is deemed “binding and irrevocable”, while the valuation of water assets is still subject to negotiation, he said.

The agreement also states that Selangor must ensure that all necessary approvals for the Langat 2 water treatment plant are given within 30 days from the date of the MoU.

“This means the Selangor government relinquished its one weapon that it had against the federal government ― the construction of Langat 2 ― without getting any binding commitment in return,” Rafizi said.

“Secondly, the MoU does not deal with the one big problem that has been stunting water talks ― the refusal of existing concessionaires like Puncak Niaga and Syabas to accept Selangor’s price offer,” he added.

“If the concessionaires disagree with the offer, the Selangor government will have to re-negotiate the price and find a new avenue because there is no commitment on the part of the federal government to complete the restructuring process,” he said.

Rafizi said Khalid needs to explain the deal in greater detail to ensure that the state government had not been shortchanged.

“My responsibility is to make sure the public is in the know,” he said.

Khalid has been summoned to explain the water deal to PR de facto chief Datuk Seri Anwar Ibrahim some time this week.