Highlight Ongkili: WASIA not invoked yet

by **Cals** Fri 14 Mar 2014, 09:16

Highlight Ongkili: WASIA not invoked yet

Business & Markets 2014

Written by Fatin Rasyiqah Mustaza of theedgemalaysia.com

Friday, 14 March 2014 08:56

KUALA LUMPUR: Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Johnity Ongkili has said that the federal government has not invoked Section 114 of the Water Services Industry Act 2006 (WASIA) but is in the midst of doing so, adding that the process will take three months.

He also pointed out that negotiations were still permitted between the Selangor government and the water concessionaires, that had rejected the state’s RM9.65 billion offer for their water assets.

“The government is preparing to invoke Section 114 of the WASIA, that means [taking] control of water [assets] since the negotiations failed … but we still allow Selangor to continue to negotiate with the concessionaires under the header of willing buyer, willing seller,” he told the media at the Parliament lobby yesterday.

The minister said the concessionaires were given enough time to decide. “The only thing now is the Selangor state and concessionaires are not able to make an agreement, but I still give it a glimmer of hope.”

Ongkili explained that the Selangor government and water concessionaires — Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash), Puncak Niaga Sdn Bhd (PNSB) and Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) — were given until March 10 to come to an agreement, and the parties concerned have now been given a grace period of three months before the Act is invoked.

ngkili’s remarks however contradict the joint statement issued to the press on Tuesday, which stated that both the federal and Selangor governments have decided to invoke WASIA.

The statement was issued after a decision was made at a meeting between Ongkili and Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim on Tuesday afternoon.

The following day, Khalid said the Selangor government had reduced its takeover offer for the operations of the four water concessionaires by RM2 billion to RM7.65 billion following the federal government’s decision to invoke WASIA.

The reason for the reduction in the offer price was because the state is only paying for the value of the assets and not the equity value of the three concessionaires.

Khalid also noted that under WASIA the three concessionaires who had rejected the offer could not go for arbitration.

Ongkili, meanwhile, explained that the federal government would be signing three supplementary agreements for the Langat 2 water treatment plant, the additional RM2 billion for the settlement of the equity payments and the water restructuring exercise.

“I’m taking the two agreements (for Langat 2 and the RM2 billion equity payment) to the Cabinet this week. As for the restructuring, because of the rejection, it has to go through continuous discussions. In the meantime the government will finalise operations for the invocation of Section 114,” he said.

This raises the question on the purpose of the additional RM2 billion that the federal government has agreed to pump in in the name of facilitating the water asset restructuring in Selangor.

The contradicting remarks made by the authorities are not helping public-listed Puncak Niaga Holdings Bhd and Gamuda Bhd, which have succumbed to selling pressure on news that the federal government will invoke WASIA.

Puncak Niaga’s share price fell 8% or 26 sen to RM3 yesterday from RM3.26. The stock has declined 15.5% from its height of RM3.55 on Feb 27. Puncak Niaga wholly owns water treatment concession PNSB and has a 70% equity stake in Syabas, the state’s sole water distributor.

Meanwhile, Gamuda, which holds a 30% equity interest in Splash, saw its share price down 22 sen or 4.7% to RM4.48 on Wednesday. It closed at RM4.50 yesterday.

This article first appeared in The Edge Financial Daily, on March 14, 2014.

by **Cals** Fri 14 Mar 2014, 09:18

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Highlight Ongkili: WASIA not invoked yet

Highlight Ongkili: WASIA not invoked yet

Re: Highlight Ongkili: WASIA not invoked yet