Hadi has checkmated Anwar

By MT Webmaster Last updated Jul 31, 2014

Anwar is desperate. He wants Khalid out after Hari Raya because around that same time Selangor will finalise and sign the water agreements with the federal government. And once that is done there is no turning back.

THE CORRIDORS OF POWER

Raja Petra Kamarudin

Today, PAS President Abdul Hadi Awang has publicly declared what many have known for quite some time now. And that is he wants Khalid Ibrahim to continue as the Selangor Menteri Besar until the end of his term.

The fact that earlier this week the PAS Deputy President, Mat Sabu, attended the meeting with Lim Guan Eng and Anwar Ibrahim, the Secretary-General of DAP and the de facto leader of PKR respectively, is very telling. Mat Sabu, Guan Eng and Anwar are all not party presidents. Hence they do not officially represent the Presidential Council.

The Presidential Council is the platform where Pakatan Rakyat meets to discuss sensitive and complicated issues (such as party policies and party stands) so that a consensus can be reached. And a consensus here means all three party Presidents have to agree to a certain issue. A simple majority of two versus one is not good enough.

Hadi said there is no need for a Presidential Council meeting to discuss the issue of the replacement of the Selangor Menteri Besar because PAS will not support the move. Hence a meeting would be a total waste of time and if a meeting is called most likely PAS may not even bother to attend. After all, PAS will vote ‘no’ anyway, so why the need to meet?

Hadi said PAS not only does not support the move to oust Khalid but the party is prepared to allow the decision regarding Khalid’s position to be made by His Royal Highness the Sultan of Selangor. In other words, it is entirely up to the Sultan whether His Royal Highness wants Khalid to stay or go and PAS gives this ‘mandate’ to the Sultan, so to speak.

In that same spirit, PAS will also not support any vote of no confidence against Khalid in the Selangor State Assembly in the event PKR and DAP pushes for one. As Hadi said, he thinks Khalid is the best person to lead Selangor considering there are no financial scandals or abuse of state funds since he took over as Menteri Besar in 2008.

On Tuesday, 22nd July 2014, Wan Azmi Wan Hazmah met Abdul Wahid Omar (pic above), the Minister in the Prime Minister’s Department in-charge of the Economic Planning Unit, to try to enlist the federal government’s help in pressuring the Selangor government to agree to pay him RM2.5 billion instead of RM250 million for SPLASH, one of the water concessionaires.

It seems the federal government does not want to interfere in what is already a fait accompli just awaiting the official signing of the agreements. Hence it will be up to the Selangor state government and not the federal government to decide on how much the SPLASH shareholders should receive.

Wan Azmi (pic above) and Wahid are from the Maybank Old Boy network so the former hopes he can get the latter’s help in his case against the Selangor government. Wan Azmi appears to have a sympathetic ear in Wahid who also thinks that SPLASH is getting a raw deal from Selangor. Now, however, since this meeting is public knowledge, Wahid may have to back off lest he is accused of having shady dealings with Wan Azmi, a known opposition supporter and financier.

According to Selangor state, the same principle was applied to the derive the equity values for SPLASH and SYABAS i.e. based on non-compounded, 12% return on equity capital contributed up to 31 December 2012 and deducting historical dividend payouts to shareholder.

Selangor argues that whilst the SYABAS shareholders have yet to receive dividends on their equity contribution, the SPLASH shareholders have already taken out an estimated RM725.4 million in historical dividends.

If the dividends of RM725.4 million are taken into consideration, the total return to SPLASH shareholders amounts to RM976 million. This represents a payout of RM576 million over and above their original investment of RM400 million, which gives them an absolute return of 144%.

The state also notes that a significant portion of SYABAS’ negative net worth arises from its accumulated losses, which has come about largely because of the high cost of treated water paid to water treatment plant operators such as SPLASH. As of end 2013, the overdue amounts payable to the three water treatment plant operators (including SPLASH) stands at RM4.43 billion.

The SYABAS concession requires large CAPEX e.g. for 2005 to 2012 alone, SYABAS is expected to spend RM2.4 billion on items such as developing and upgrading the distribution system, asset replacement and their non-revenue water reduction program. The total CAPEX over the concession period is estimated to be in excess of RM10 billion. This essentially means that SYABAS will carry larger depreciation expenses in its books.

Contrast this with SPLASH’s CAPEX cost of RM2.146 billion for the construction of SSP3 treatment plant. Thereafter, any amount spent on CAPEX is predominantly for maintenance and repairs of the completed plant.

SYABAS is at an earlier stage of its concession tenure where heavy CAPEX is required and losses are not uncommon at this stage. In comparison, SPLASH is already almost halfway through its concession tenure and as such should be profitable.

In short, what Selangor is saying is that the same calculation was used for all concessionaires and the SPLASH shareholders are not being short-changed as what Wan Azmi alleges.

The issue of why Khalid needs to be ousted just after Hari Raya is simple. They need to torpedo the water agreements and this cannot be done if Khalid is still in charge. Hadi is aware of this and he is not supporting the move to remove Khalid which will translate to an additional cost of RM2.25 billion to the state, not to mention the RM3 billion reserves the state has, which will also be exposed to risk if Khalid is not around to control that money.

What was that war cry again? Ah, yes, good governance, transparency and accountability.

Raja Petra Kamarudin RPK