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Selangor water players should get less under forced takeover

March 12, 2014

The Selangor water concessionaires should be getting a lower amount than the state’s previous offer of RM9.65 billion now that WSIA (Water Services Industry Act) has been invoked by the federal government, according to Tony Pua Petaling Jaya Utara Member of Parliament (MP).

“Based on WSIA the formula for compensation is different and defined in the concession agreements. Based on the concession agreements formula, assuming that the federal government enforces it, we should only be paying between RM6.3 billion to RM7.7 billion. This would save taxpayers an estimated RM2 billion or more,” Pua told KiniBiz.

Forced acquisition

Section 114 of water industry services act 2006 120314Yesterday, the federal government announced that it would finally exercise its rights under WSIA to force the acquisition of Selangor’s water assets.

In a subsequent statement on his Twitter account, Khalid confirmed that the state will only be paying RM7.65 billion in the WSIA takeover, a savings of RM2 billion from the previous offer.

Last month, the Selangor and federal government agreed to break the five-year deadlock in negotiations to restructure Selangor’s water industry by signing an MoU that facilitates the RM9.65 billion takeover of the state’s water concessionaires and the approval of the Langat 2 water treatment project.

Nevertheless, only Kumpulan Abass (a subsidiary of the Selangor state) accepted the final offer. Kumpulan Darul Ehsan Bhd (KDEB) offered RM990.2 million for Kumpulan Perangsang Selangor (KPS)’s 90.83% stake in Titisan Modal Sdn Bhd, which in turn wholly owns Konsortium Abass Sdn Bhd.

The other concessionaires Puncak Niaga, Syarikat Bekalan Air Selangor (Syabas) and Syarikat Pengeluar Air Selangor (SPLASH) failed to agree on the offer tabled in the MoU. This led to the invoking of WSIA by the federal government.

The Selangor state and federal governments are also due to announce another agreement following the MoU. This should contain more details of the water restructuring deal.

However, it is unclear how the additional RM2 billion funds promised by the federal government in the MoU would be utilised under the WSIA takeover.

Onus on federal government

Selangor state water concesssions 270214 addedDzulkefly Ahmad executive director of PAS (Parti Islam SeMalaysia) Research Centre strongly advises the Selangor state government not to issue any more approvals for the Langat 2 water treatment plant until the federal government’s forced acquisition is finalised.

“I’ve said all along that using WSIA is the right way to solve this issue. But it’s only verbal for now. We have had a discussion with Khalid and reminded him that the agreement to enforce WSIA should be in black and white to secure the state’s interests. We should not be signing off on anything to give them (federal government) mandate for Langat 2 just yet. There must be a reciprocal response from the federal government,”  Dzulkefly told KiniBiz.

Dzulkefly is a member of a special committee newly formed by Pakatan Rakyat (PR) represented by the alliance’s three component parties including Parti Keadilan Rakyat (PKR) strategic director Rafizi Ramli and Democratic Action Party (DAP) national publicity secretary Tony Pua.

The committee’s task is to cooperate with the Selangor state government in implementation of the water industry restructuring exercise.

“In all earnestness, now that Khalid has to work in consultation with the committee he should be more forthcoming in the water issue. There should be no repeat of the MoU that was done without consultation. We are here to help and not be a nuisance, much less to stifle him,” said Dzulkefly.

“I have congratulated them both (Khalid and Ongkili) for doing the right thing. Now the onus is on the federal government. We will always be scrutinising things to provide a check and balance.”

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One Comment leave one →
  1. najib manaukau permalink
    March 13, 2014 5:17 am

    Don’t you think it is cheaper and better for the state to build a dissimilation plant in the state if Singapore is able to do it ?

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