Water: Putrajaya seeks revision of RM9.65b offer, S'gor sticks to its guns

by **Cals** Fri 11 Apr 2014, 01:31

Business & Markets 2014

Written by Meena Lakshana, fz.com (contributor to theedgemalaysia.com)

Thursday, 10 April 2014 18:36

Last Updated: 6:26pm, Apr 10, 2014

PETALING JAYA (April 10): The Federal Government has asked the Selangor government to revise its offer to the water concessionaires in the state.

The request was extended by Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili to the state government in a letter dated April 8, Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim said.

It was following appeals from the federal-linked Puncak Niaga Sdn Bhd and its subsidiary Syarikat Bekalan Air Selangor Sdn Bhd (Syabas).

However, Abdul Khalid said although the state is willing to consider the request, it is adamant in the initial price offer of RM9.65 billion to take over all the four water concessionaires in the state.

“The state government is agreeable to review the appeal by Puncak Niaga and Syabas to be part of the restructuring of the water services industry before the implementation of Section 114 of the Water Services Industry Act (WSIA) 2006 conducted by the Federal Government,” he said in a statement today.

“However, the proposed cost of the purchase put forth by the two companies cannot exceed the original offer of the overall RM9.65 billion.

“This is important because an increase in the acquisition offer will have a negative impact on water tariffs and ultimately burden the people, especially the over 5 million water consumers in Selangor, Kuala Lumpur and Putrajaya,” he added.

Abdul Khalid said this does not take away the state government’s commitment to work together with the ministry to initiate the implementation of Section 114.

The RM9.65 billion offer extended by the state government to the water concessionaires expired on March 10 after Puncak Niaga, Syabas and Syarikat Pengeluar Air Selangor Holdings (Splash) rejected it.

Only Konsortium Abass Sdn Bhd, a Selangor government subsidiary, accepted the offer.

Although Splash had wholly rejected the offer, Puncak Niaga and its subsidiary, Syabas had said they would consider the state government’s offer, provided it is subjected to certain conditions.

The conditions include:
>a higher return on equity of 15% instead of 12%;
>full payment of the disputed compensation for the non-increase in water tariff hikes by the state government;
>the rejection of due diligence by the state government on Puncak Niaga and Syabas assets; and
>the rejection of international arbitration in the event of disagreements over the appropriate return of equity.

PKR strategic director Rafizi Ramli, who is part of the newly-formed committee overseeing the Memorandum of Understanding (MoU) between the state and the federal government, had earlier claimed that the initial offer sought by the water concessionaires was about RM14 billion, which was too high an amount.

Puncak Niaga, of which Tan Sri Rozali Ismail is executive chairman, has a 70% stake in Syabas, while Splash is 40% controlled by Gamuda Bhd, with the rest of the equity evenly split between Kumpulan Perangsang Selangor Bhd and Sweetwater Alliance Sdn Bhd.

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