Minister: Forced takeover of Selangor water firms in two weeks

(MM) – Putrajaya will forcibly acquire four Selangor water utility firms in two weeks’ time, Datuk Seri Dr Maximus Ongkili has said.

The energy, green technology and water minister told local daily The Star yesterday he expects Section 114 of the Water Services Industry Act 2006 (Wasia) to be invoked after the Cabinet decides on the matter.

“After we take over, the water players in Selangor will continue to carry out the operations but subject to our terms. Under Section 114, the minister takes control, and the task force will oversee the water production and assets of the company,” he said, adding that the Cabinet committee on Selangor’s water issue will meet on Wednesday next week.

“Following this, it will be brought to the Cabinet for endorsement and subsequently for gazetting by the Attorney-General’s Chambers,” said the minister.

Ongkili said the entire process was expected to be completed in two weeks.

He pointed out that the structure of the Section 114 allowed for the appointment of not fewer than three administrators to represent the three stakeholders with interest in the water assets.

The three stakeholders are Pengurusan Aset Air Bhd (PAAB), the National Water Services Commission or Span, and the Selangor government.

Two separate task force teams will also be set up to oversee the water production and management and the assets of the concessionaires to ensure they meet repayments of their loans and bonds that have been guaranteed by PAAB.

The task force will operate and control the water treatment and distribution business in Selangor, Kuala Lumpur and Putrajaya.

Ongkili cautioned that the invocation of Section 114 was just an interim step that was needed as things were not working out between the concessionaires and the Selangor government in the restructuring of the state’s water assets.

“It will be an interim three-year takeover till the first trickle of water comes from the Langat 2 water treatment plant or shorter, depending on the situation.

“No one will be displaced. They (the players) will still own the assets, but we will monitor to ensure they service their interest payments,” he said.

A memorandum of agreement signed between Selangor and Putrajaya last month stated that the state would take over the four water concessionaires operating in the state — Syarikat Bekalan Air Selangor Bhd (Syabas), Puncak Niaga Sdn Bhd (PNSB), Konsortium Abbas Sdn Bhd (ABBAS) and Syarikat Pengeluar Air Selangor Holdings Bhd (Splash).

But only the state-owned ABBAS accepted the offer by the time it had expired last Monday.

Splash rejected the offer outright, while PNSB and its subsidiary, Syabas, said they were willing to “consider” the state’s offer on several conditions.

The companies want higher pay-outs, stipulating a 15 per cent return on equity instead of the 12 per cent offered. They also want to be compensated in full for not putting up water rates.

This led Selangor Mentri Besar Tan Sri Khalid Ibrahim to urge Putrajaya to intervene and force the firms to accept the offered buyout.