Highlight Deadline for takeover ticks closer

by **Cals** Fri 25 Apr 2014, 02:01

Highlight Deadline for takeover ticks closer

Business & Markets 2014

Written by Cynthia Blemin of theedgemalaysia.com

Thursday, 24 April 2014 09:20

KUALA LUMPUR: Selangor’s four water concessionaires have until the end of this week to decide whether to accept the state government’s offer of RM9.65 billion to take over their assets, which was extended by the federal government, said Selangor Menteri Besar Tan Sri Khalid Ibrahim.

An earlier offer by the state government to the water concessionaires expired on March 10, which saw Puncak Niaga Sdn Bhd, Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) and Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) rejecting it. Only Konsortium Abass Sdn Bhd, a Selangor government subsidiary, accepted the offer.

Following this, Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili had stepped in to give more time for Selangor and the water
concessionaires to reach amicable terms before the federal government moves to invoke Section 114 of the Water Services Industry Act 2006 (WASIA). By invoking Section 114, it gives federal government the right to assume control of water productions and management in a state in the name of national interest.

Khalid said the concessionaires have another “two to three days left” to make up their minds as both the federal and state governments are currently putting down on paper the terms and conditions required for the implementation of the Act.

“I am excited about implementing Section 114,” Khalid told reporters after chairing the weekly state Exco meeting here yesterday.

Khalid had previously pointed out that the invocation of Section 114 would save the state RM2 billion in the acquisition exercise, as it needs to pay only RM7.65 billion.

Puncak Niaga 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 (KPS) and Sweetwater Alliance Sdn Bhd.

The Cabinet had on April 4 agreed that Section 114 of WASIA be invoked to ensure the security and sustainability of water supply for the people in Selangor, Kuala Lumpur and Putrajaya, but the process is taking longer than expected.

“We are now talking on [finalising] the draft on how the letter is being written to each other,” said Khalid when asked on the progress so far on the water restructuring exercise.

Khalid added that both the governments have to be detailed because Section 114 is a section that is new, especially in executing it.

The federal and Selangor governments had earlier in the year signed a Memorandum of Understanding (MoU) on the restructuring of the water industry in Selangor, which included the construction of the much delayed Langat 2 water treatment plant.

Meanwhile, the Selangor government has decided to reinstate the raw water licences to Puncak Niaga Holdings Bhd and KPS.

“The licence for the raw water extraction will be organised in such a way that it will be renewed on a monthly basis,” said Khalid, noting that they would be allowed to draw water until the water restructuring exercise is completed.

Puncak Niaga’s licence will expire on May 31, while the licences held by KPS through its 90.83%- owned Konsortium ABASS and 30% owned Splash, will expire on May 31 and June 30 respectively.

Khalid also said the Selangor government has approved an allocation of RM10 million to build infrastructure to pump water from former tin mines into Sungai Selangor to supplement raw water supply.

Installation works began a few days ago and the system is capable of supplying 900 million litres a day and the current water rationing exercise will be stopped if the plan is effective, said Khalid.

“The water rationing will be stopped if the water level in the Sungai Selangor dam which is currently at 38.97%, rises above 40% and shows a rising trend,” he added.

This article first appeared in The Edge Financial Daily, on April 24, 2014.