KUALA LUMPUR, Oct 23 — Putrajaya’s latest RM151 million soft loan to Syabas would only serve to strengthen the water supplier’s bargaining power in demanding a higher takeover price from Selangor during negotiations, DAP’s Tony Pua warned today.

The Petaling Jaya Utara MP criticised the federal government’s latest round of loans to Syabas, saying that it would further delay a deal from being reached.

“Any sensible government would have taken the opportunity to pressure Syabas to ‘settle’ the impasse before granting any financial favours,” Pua said in a statement today.

“The latest RM151 million worth of loans is also a sign of Syabas’ financial desperation as negotiations are already underway between the federal and Selangor government together with Syabas.

“For this loan to be extended with extensive negotiations taking place will surely strengthen the bargaining power of Syabas to press for a higher takeover price from the state and delay any deal from happening soon,” added the DAP publicity chief.

Yesterday, national news agency Bernama quoted Puncak Niaga Holdings Bhd (PNHB), of which Syabas is a subsidiary, as saying that the federal government has extended a RM151 million loan to Syabas to replace old pipes and to reduce non-revenue water losses in Selangor, Kuala Lumpur and Putrajaya.

Pua said that Putrajaya has handed Syabas RM3.6 billion in loans and financial grants to “save the company from collapse” since 2009.

“The question needs to be asked as to why the BN (Barisan Nasional) government is persistent in extending these hundreds of millions of ringgit of annual credit facilities to Syabas, despite the latter’s obvious failure to provide quality water services to the public as demanded on the the water concession agreement signed in 2004?” questioned the federal lawmaker.

Pua pointed out that under the water concession agreement, the federal and state governments are not obliged to provide Syabas loans and grants in order to enable the water concessionaire to upgrade its infrastructure and to provide quality water services in Selangor and KL.

“That means that the RM3.6 billion extended to Syabas is done entirely out of the kindness of the BN government to save a private concessionaire,” he said.

Pua also pointed out that despite Putrajaya being strapped for cash, noting the country’s budget deficit and high debt level, the federal government continues to “use taxpayers’ monies wantonly to rescue BN’s crony companies”.

“By right, if Syabas fails to perform its obligations to upgrade and maintain its water pipes to provide quality water services as agreed under the concession agreement, the federal government should sue the company for compensation or terminate the agreement for default,” he said.

“However in Malaysia, despite telling ordinary Malaysians that subsidies need to be cut and more taxes need to be collected, crony companies continue to enjoy the implicit government guarantee from financial distress,” added Pua.

Despite Syabas’ financial troubles, PNHB paid its executive chairman, Tan Sri Rozali Ismail, RM33.4 million in remuneration last year.

Putrajaya and Selangor have been wrangling over control of the state’s water supply since Pakatan Rakyat (PR) took over the country’s wealthiest state in Election 2008, with the matter turning into an election issue during the May 5 general polls this year.

Selangor Mentri Besar Tan Sri Khalid Ibrahim, however, said last June that Prime Minister Datuk Seri Najib Razak had taken a “positive step” in directing the minister of energy, green technology and water to engage Selangor on its bid to take over water utilities in the state.

Selangor moved to buy out the state’s water utility from Syabas and other concessionaires in July last year after contending that the firms had failed to meet mandated reductions in non-revenue water.

The state government is now offering RM9 billion for all of the existing water concessionaires’ assets and liabilities, including their bonds.