KUALA LUMPUR, March 11 — The Selangor government no longer needs to expedite approvals for the construction of the long-opposed Langat 2 project now that Putrajaya has reneged on its end of the water deal, DAP’s Tony Pua said today.
The federal lawmaker said the fact that three Selangor water firms have rejected the state’s buyout offer shows that the federal government had failed to “cajole” them into upholding the controversial water restructuring Memorandum of Understanding (MoU) signed on February 26.
Selangor, on the other hand, had shown its goodwill and readiness to cooperate with Putrajaya to resolve the critical water crisis by inking the deal, he added.
More than that, Pua noted the state had also agreed in the MoU to immediately approve the development order for the construction of the Langat 2 water treatment plant project, and to expedite all other required approvals such as land rights, access permissions and other permits to within 30 days of signing the MOU.
“As highlighted above, the federal government has failed to cajole these concessionaires into accepting the above offer.
“Hence, the BN government has failed to live up to its end of the bargain,” he said in a statement here.
“Therefore,” Pua added, “the Selangor state government no longer needs to grant all the additional approvals required by Langat 2 for land rights, access permissions and other permits.
The memorandum of understanding (MoU) between the political rivals was signed by Khalid and Energy, Water and Green Technology Minister Datuk Seri Dr Maximus Ongkili at a hastily convened event in Putrajaya, last month.
Under the MoU, Selangor will take over the operations of four water concessionaires — Syarikat Bekalan Air Selangor Bhd (Syabas), Puncak Niaga Sdn Bhd (PNSB), Konsortium Abbas Sdn Bhd and Syarikat Pengeluar Air Selangor Holdings Bhd (Splash) — and place these under the state-owned Kumpulan Darul Ehsan Sdn Bhd.
The acquisition of the water supply infrastructure carries a price tag of RM9.65 billion. In exchange, Selangor agreed to approve the development order for the Langat 2 water treatment plant and ensure all necessary approvals would be given within 30 days from February 26.
The offer was based on a 12 per cent return on equity per annum and water assets to be acquired by the federal government’s Pengurusan Aset Air Bhd.
A day later, Maximus said that he was “confident” in Khalid’s ability to seal the deal with the four water concessionaires within 90 days, and “will cross the bridge” if it failed, without committing to invoking a law to forcefully take over the companies.
This is despite the fact that the offer price remained the same as before the deal had fallen through.
Today, Pua pointed out that Syabas and Splash have effectively rejected the renewed offers by the state government, in an announcement made to Bursa Malaysia yesterday.
While Splash rejected the offer outright, Puncak Niaga and its subsidiary, Syabas, said they were willing to “consider” the offer by the state subject to several unreasonable conditions, the DAP leader said.
These conditions include a higher return on equity of 15 per cent instead of 12 per cent and the full payment of the disputed compensation for the non-increase in water tariff hikes by the state government.
The two companies have also rejected the due diligence by the state government on Puncak Niaga and Syabas assets and refused to go through international arbitration in the event of disagreements over the appropriate return of equity.
“Hence, the state of the water industry restructuring has returned to exactly square one, where only one company accepted the offer, that is Selangor’s own subsidiary, Kumpulan ABASS.
“‘To ensure that the MOU remains intact, it is now up to the federal government to announce its commitment by announcing that it will immediately exercise all its powers under the Water Services Industry Act (WSIA), particularly using Clause 114 to compulsorily acquire these water companies based on the compensation model detailed in the concession agreements,” Pua said.
In the meantime, he said, the Selangor state government, via its executive council and the Selangor state assembly, will exercise all its powers enshrined under the laws of Selangor and the Federal Constitution to deny any further licences be issued or awarded to the relevant federal government entities for the purposes of the Langat 2 project.
Without these additional approvals, the Langat 2 project cannot proceed.
“The Pakatan Rakyat administration and government will not be cheated by the federal government.
“We will not betray their trust of our Selangor voters and will fight tooth and nail with the BN government to ensure that the interests of the Selangor residents are fully protected,” he said.
Puncak Niaga Holdings Bhd controls two water concessions, which are PNSB, a water treatment plant operator, and Syabas that has the mandate to distribute water in the state, KL and Putrajaya.
Gamuda Bhd has a 40 per cent stake in Splash.
Puncak Niaga is the biggest water treatment operator in Selangor by virtue of its 100 per cent ownership of PNSB and its 70 per cent interest in Syabas.
Splash is 40 per cent controlled by Gamuda, 30 per cent by KPS and another 30 per cent by the Sweetwater Alliance Sdn Bhd.
The fourth water treatment concessionaire is Konsortium Abass, which is almost wholly-owned by KPS, which in turn is a 57.9 per cent subsidiary of KDEB.
According to The Star Online, Gamuda said anything less than Splash’s net asset value (NAV) of RM2.54 billion will result in losses on divestment to Gamuda and the company could not justify the acceptance of such a huge loss to its shareholders. The takeover offer for the company is less than 10 per cent of its NAV.
Water supply in Selangor has been a contentious issue since the state fell to Pakatan Rakyat in Election 2008, with the residents experiencing repeated supply outages that the state administration alleged were due to sabotage by the rival Barisan Nasional coalition.
