Solution will lead to better water supply

by **Cals** Sat 28 Sep 2013, 18:28

Published: Saturday September 28, 2013 MYT 12:00:00 AM
Updated: Saturday September 28, 2013 MYT 11:25:02 AM
Solution will lead to better water supply
BY SHARIDAN M ALI
[You must be registered and logged in to see this image.]
AFTER four failed attempts, it looks like a deal towards resolving the deadlock on the water supply situation in Selangor is flowing towards a resolution.
An amicable solution is being worked out involving the federal government, state government and its four concessionaires, and the mood at the negotiation table is more amicable than ever.
Talks on solving the water issue in Selangor started in 2008, but years of talks have so far yielded nothing.
As a result, the development of water infrastructure and services in the state has been stagnant, with piecemeal efforts to address situational crises being adopted rather than a comprehensive overhaul.
The state will then undertake a review to bring more efficiency into the operations of water supply in Selangor. It will seek federal funding to meet future investments to improve the water infrastructure in the state.

[You must be registered and logged in to see this image.]

Why now?
It’s been argued that the need to commence talks again is due to the need to solve the supply and demand equation in the state.
Typically, any water disruption affecting high-growth areas in the Klang Valley, Selangor and Putrajaya will result in fingers being pointed at all parties, especially Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), which is controlled by Puncak Niaga.
Puncak Niaga currently operates 29 water treatment plants that supply water to Syabas, which then distributes the water.
Other water treatment operators in Selangor include Syarikat Pengeluar Air Selangor Sdn Bhd (Splash) with three treatment plants, Konsortium Abass Sdn Bhd with one treatment plant and Konsortium Air Selangor Sdn Bhd (KASB) with one treatment plant.
One executive from the Selangor water concessionaire says it is important to address the issue of clean water supply in the Klang Valley, Selangor and Putrajaya now, as the country is moving towards high-income and developed nation status by 2020.
“The raw water supply and treatment plants are now just enough to cater to current needs, with water reserve capacity at a low 1%.
“Any drought or pollution to the rivers would result in major water disruption, as most of the treatment plants are already operating beyond their capacity,” he says, adding that ideally, the water reserve capacity should be kept at around 20%.
The executive explains that it is quite difficult for water treatment plants that are already operating beyond their capacity to provide back-up in any case of water disruption that could be due to pollution to the rivers or a long draught season.
“Currently, the seven dams and rivers in Selangor are just enough to cater to present needs and they won’t be able to cater for any future demands.
“Most of the raw water supply comes from the rivers, while the dams have a back-up function.
“Already, about 700 projects have been put on hold because of inadequate water supply, as we are more concerned about the needs of the public in general,” he says.
The stress areas for water supply in the Klang Valley are Seri Kembangan, Cheras and Balakong, among others.
“Our water treatment plants, especially in Semenyih, Sungai Selangor phase one, two and three and Cheras Batu 11, are already operating beyond their capacity to cater to the treated water needs of the stress areas.
“Thus, any water disruption is not because of our inefficiency. It’s simply because we do not have enough raw water supply,” he explains.
Although Selangor houses seven dams, a study done by Suruhanjaya Perkhidmatan Air Negara (Span) anticipates that all of them would be dried up in four months if all the 34 water treatment plants are to solely source their raw water from there. All the related natural resources projects in the state, including water treatment plants, are under the purview and need approval from the state government.
There are those who welcome the federal government’s idea of Langat 2 to source raw water from Pahang.
The proposed development of the Langat 2 water treatment plant was initially planned in 2000 to treat raw water from Pahang to address the water shortage, rising population and industrial development in Putrajaya, Kuala Lumpur and Selangor.
It is understood that the water from Pahang is ready to be supplied, pending the development of the treatment plant.
“The development of Langat 2 will increase the water reserve capacity to the ideal 20% and would cater to the Klang Valley’s future demand for the next 30 years.

On the takeover
Among the four water concessionaires in Selangor, Puncak Niaga is the largest.
Although Puncak Niaga has remained status quo on the takeover of its water assets by the state government, talk is rife that both parties are on talking terms to come to an amicable solution.
“It’s a willing buyer-willing seller basis and should come to a solution soon if the price is right,” says a source close to the company.
Puncak Niaga started its water treatment business in Selangor in the 1990s.
The company widened its role in 2004 when it was awarded a 30-year concession to manage Syabas.
The agreement was signed by the federal and Selangor state governments. The two other companies with concessions to supply treated water to Syabas are Konsortium Abass and Splash.
The other major water player in Selangor, apart from Puncak Niaga, is KDEB, which holds a stake in various water assets via its 61%-owned Kumpulan Perangsang Selangor (KPS).
KPS has a 55% stake in Konsortium Abass, 30% in Splash, 30% in Syabas and 20% in Taliworks Corp Bhd, another player in the Selangor water sector.
Splash also has Gamuda Bhd as a 40% shareholder, while the remaining 30% stake is held by The Sweetwater Alliance Sdn Bhd.
And although federal government vehicle PAAB is responsible for facilitating the consolidation of water assets in the respective states, in the case of Selangor, the mandate had been placed on KDEB in February 2008.

Puncak post-takeover
If the takeover happens, a source at Puncak says that the company has over the years been investing in the latest technology in the water business and that can be replicated elsewhere in the region.
“We need more international exposure for our expertise. So far, we have been running the water treatment business very efficiently,” he says.
He further elaborates that the sale of Puncak Niaga’s water assets will unlock the value of its assets into cash, free the company from high receivables from Syabas amounting to RM2bil and provide the company with a stronger financial footing to expand.
In mid-2008, Puncak Niaga entered the China market via its 80%-owned subsidiarySino Water Pte Ltd, a company incorporated in Singapore which focuses primarily on potential markets in China. Puncak Niaga later increased its stake in Sino Water to 98.65%.
Sino Water has established various subsidiaries in China to undertake potable water and wastewater projects in several provinces there.
For Asean countries, Puncak Niaga has formed a wholly-owned Singapore subsidiary, Puncak Niaga Overseas Capital Pte Ltd, which will spearhead its entry into Vietnam, Cambodia and Laos.
Apart from expanding its expertise in the water services sector, the source says Puncak Niaga is also very interested in expanding its oil and gas (O&G) business.
“We have the expertise in the O&G fracking process that requires very high water pressures. In the longer run, Puncak Niaga also has the aspiration to be involved in the exploration and production of oil,” he says.
At the end of 2012, the company’s O&G subsidiary, GOM Resources, had a positive impact on the group’s overall results, contributing 20.8% to the group’s revenue.
At present, Puncak Niaga’s O&G capabilities involve construction and subsea services and marine support services to the offshore services segment.
However, the unit is exploring many other areas, both mid-stream and upstream, and is looking to expand locally and overseas.
In 2012, GOM Resources set up the exploration and production division to evaluate business development opportunities, both locally and overseas.