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WSIA invoked, Selangor water concessionaires will be 'forced' to sell
by Cals Wed 12 Mar 2014, 08:29
[size=33]WSIA invoked, Selangor water concessionaires will be 'forced' to sell[/size]
Posted on 12 March 2014 - 05:37am
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[size=14]PETALING JAYA: The federal government and the Selangor government have decided to invoke Section 114 of the Water Services Industry Act (WSIA) 2006, forcing the takeover of four state water assets, after the latest attempt to consolidate the state water assets by the state government failed.
The Act allows for the compulsory acquisition of Syarikat Bekalan Air Selangor (Syabas), Puncak Niaga Sdn Bhd (PNSB), Syarikat Pengeluar Air Selangor Sdn Bhd (Splash) and Konsortium ABASS Sdn Bhd (Abass) based on the compensation model detailed in the concession agreements.
Both parties said it will now proceed with the necessary steps to facilitate the implementation of the Selangor water restructuring, as set out in the terms of the memorandum of understanding (MoU) signed on Feb 26, 2014.
"In line with the terms of the MoU, the federal government through the Ministry of Energy, Green Technology and Water (KeTTHA) shall now pursue the exercise of its rights and powers under the Water Services Industry Act 2006 (WSIA) as well as any other relevant acts, statutes or regulations to assist the state government in implementing the proposed restructuring and consolidation of the Selangor water supply industry," said KeTTHA and the Selangor Mentri Besar's Office in a joint statement yesterday.
"This includes invoking Section 114 of WSIA in order to address issues of national interest to ensure security, sustainability and viability of the water supply industry in Selangor, Kuala Lumpur and Putrajaya," it added.
The decision was jointly made at a meeting between KeTTHA Minister Datuk Seri Dr Maximus Johnity Ongkili and Selangor Mentri Besar Tan Sri Abdul Khalid Ibrahim yesterday.
At the meeting, Ongkili reaffirmed his commitment to facilitate the state government in taking over the Selangor water industry from the four concessionaires as agreed in the MoU, the statement said.
The invocation of WSIA leaves the water concession holders only with the option of seeking international arbitration to get a better offer for their assets.
On Feb 26, 2014 Selangor's subsidiary Kumpulan Darul Ehsan Bhd (KDEB) made an official offer amounting to RM9.65 billion to purchase the equity and debts of four water concession companies namely, Syabas, PNSB, Splash and Abass.
At the 5pm deadline yesterday, three companies Syabas, Puncak and Splash had declined the offer while Abass had accepted.
Meanwhile, in a research note yesterday, Maybank Research said any forced takeover will have implications on the sanctity of contracts where the government is the counter party. Its analyst opined that negotiations should continue until a willing-buyer/willing-seller outcome is reached.
Puncak Niaga Holdings Bhd had set certain conditions for acceptance, which included the removal of the arbitration clause in the latest offer, among others.
Gamuda, which outright declined the offer calling it too low, is open to abitrating the pricing of the deal but stated that it would only submit to arbitration only if the valuation is based on internationally accepted methodologies, decided by the arbitration panel. Gamuda disputes the current formula used by KDEB.
HongLeong Investment Bank pointed out that Gamuda may incur a huge disposal loss of RM920 million, if it accepts the latest offer from KDEB to purchase its 40% stake in Splash for RM1.83 billion.
It said that if Gamuda were to accept the offer, it will translate to proceeds of only RM100.2 million and result in losses of about RM920 million for the company.
Yesterday, news of Gamuda's rejection of the offer by the state government pushed its stock up 5 sen to RM4.70 with 4.74 million shares traded. Puncak Niaga's shares however fell 12 sen to RM3.35 with 1.298 million shares changed hands.
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[size=14]PETALING JAYA: The federal government and the Selangor government have decided to invoke Section 114 of the Water Services Industry Act (WSIA) 2006, forcing the takeover of four state water assets, after the latest attempt to consolidate the state water assets by the state government failed.
The Act allows for the compulsory acquisition of Syarikat Bekalan Air Selangor (Syabas), Puncak Niaga Sdn Bhd (PNSB), Syarikat Pengeluar Air Selangor Sdn Bhd (Splash) and Konsortium ABASS Sdn Bhd (Abass) based on the compensation model detailed in the concession agreements.
Both parties said it will now proceed with the necessary steps to facilitate the implementation of the Selangor water restructuring, as set out in the terms of the memorandum of understanding (MoU) signed on Feb 26, 2014.
"In line with the terms of the MoU, the federal government through the Ministry of Energy, Green Technology and Water (KeTTHA) shall now pursue the exercise of its rights and powers under the Water Services Industry Act 2006 (WSIA) as well as any other relevant acts, statutes or regulations to assist the state government in implementing the proposed restructuring and consolidation of the Selangor water supply industry," said KeTTHA and the Selangor Mentri Besar's Office in a joint statement yesterday.
"This includes invoking Section 114 of WSIA in order to address issues of national interest to ensure security, sustainability and viability of the water supply industry in Selangor, Kuala Lumpur and Putrajaya," it added.
The decision was jointly made at a meeting between KeTTHA Minister Datuk Seri Dr Maximus Johnity Ongkili and Selangor Mentri Besar Tan Sri Abdul Khalid Ibrahim yesterday.
At the meeting, Ongkili reaffirmed his commitment to facilitate the state government in taking over the Selangor water industry from the four concessionaires as agreed in the MoU, the statement said.
The invocation of WSIA leaves the water concession holders only with the option of seeking international arbitration to get a better offer for their assets.
On Feb 26, 2014 Selangor's subsidiary Kumpulan Darul Ehsan Bhd (KDEB) made an official offer amounting to RM9.65 billion to purchase the equity and debts of four water concession companies namely, Syabas, PNSB, Splash and Abass.
At the 5pm deadline yesterday, three companies Syabas, Puncak and Splash had declined the offer while Abass had accepted.
Meanwhile, in a research note yesterday, Maybank Research said any forced takeover will have implications on the sanctity of contracts where the government is the counter party. Its analyst opined that negotiations should continue until a willing-buyer/willing-seller outcome is reached.
Puncak Niaga Holdings Bhd had set certain conditions for acceptance, which included the removal of the arbitration clause in the latest offer, among others.
Gamuda, which outright declined the offer calling it too low, is open to abitrating the pricing of the deal but stated that it would only submit to arbitration only if the valuation is based on internationally accepted methodologies, decided by the arbitration panel. Gamuda disputes the current formula used by KDEB.
HongLeong Investment Bank pointed out that Gamuda may incur a huge disposal loss of RM920 million, if it accepts the latest offer from KDEB to purchase its 40% stake in Splash for RM1.83 billion.
It said that if Gamuda were to accept the offer, it will translate to proceeds of only RM100.2 million and result in losses of about RM920 million for the company.
Yesterday, news of Gamuda's rejection of the offer by the state government pushed its stock up 5 sen to RM4.70 with 4.74 million shares traded. Puncak Niaga's shares however fell 12 sen to RM3.35 with 1.298 million shares changed hands.
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Re: WSIA invoked, Selangor water concessionaires will be 'forced' to sell
by Cals Wed 12 Mar 2014, 08:29
demm 
Cals- Administrator
- Posts : 25277 Credits : 57721 Reputation : 1766
Join date : 2011-09-08
Location : global
Comments : “My plan of trading was sound enough and won oftener that it lost. If I had stuck to it Iâ€d have been right perhaps as often as seven out of ten times.â€
Stock Exposure : Technical Analysis / Fundamental Analysis / Mental Analysis
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» Selangor water saga: Three down, one more to go?
» War of words in Selangor water saga
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» Selangor water impasse to end by December
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