Gamuda boss holding Selangor to ransom for maximum profit, Pakatan says

(MM) – Gamuda Bhd refused to sign the water concessionaire takeover offer by the Selangor government because it wanted a higher payout and “unreasonable” returns for its shareholders, Pakatan Rakyat (PR) leaders said today.

The opposition leaders flayed Gamuda’s group managing director Datuk Lin Yun Ling for claiming recently that the sanctity of government contracts would be in question should the federal government forcibly acquire four Selangor water utility firms as part of the state’s water restructuring plan.

Gamuda’s subsidiary Syarikat Pengeluar Air Selangor Holdings Bhd (Splash) is one of the water firms subject to Putrajaya’s invocation of Section 14 of the Water Services Industry Act 2006 (Wasia).

“It is completely hypocritical for Datuk Lin to preach ‘the sanctity of contracts’ when in the water concessionaire contracts which Gamuda’s subsidiary, Syarikat Pengeluar Air Selangor Holdings (SPLASH) willingly signed, there were clear terms set out for the purposes of terminating the concession and buy back by the federal and/or state governments,” PR’s Tony Pua, Rafizi Ramli and Dr Dzulkefly Ahmad said in a joint statement today.

The three pointed out that in the original concessionaire agreements, in the event of any termination of a current contract, the state government will have to compensate the concessionaire by acquiring the value of the water assets under the concession.

This is also to ensure that the concessionaire will receive a minimum return of 12 per cent per annum for the previous years of operations.

“Hence, it is clear that it is Datuk Lin himself who is refusing to abide by the contract which his company has signed gleefully, and not the state or federal government.

“It is Datuk Lin who refuses to honour ‘the sanctity of contract’ because he wants unreasonable returns for his shareholders,” the statement added.

Last Friday, the Gamuda boss was quoted by the Edge Financial Daily as saying that the sanctity of government contracts would be questioned if the federal government invoked Wasia to take over Selangor’s water operations.

Lin had said “when investors look at it, they will question where the sanctity of the contract is. Why can’t they do it on a ‘willing buyer, willing seller’ basis? The blame will be on the federal government because it is the only one who can invoke WASIA.”

Energy, green technology and water minister Datuk Seri Dr Maximus Ongkili said last month that the Wasia would be invoked by April.

A memorandum of agreement signed between Selangor and Putrajaya in February 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 payouts, 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.