Selangor-Putrajaya complete water master deal, Air Selangor in charge from March 2016

SHAH ALAM, Sept 8 — Pengurusan Air Selangor Sdn Bhd (Air Selangor) is set to be the new water service provider for Malaysia’s most populous state and the two neighbouring Federal Territories from March next year, following the completion of the master agreement with Pengurusan Asset Air Berhad (PAAB) today.

Selangor Mentri Besar Azmin Ali said that with the completion of the master agreement, Air Selangor will take over water distribution for Selangor, Kuala Lumpur and Putrajaya.

“All efforts would then be focusing on further improving water treatment services, distribution systems, reduction of non-revenue water (NRW) and most critically, continued and sufficient water supply to consumers,” he said after the signing by the chief executives of both companies.

With the completion of the long-drawn out master agreement, the federal government will release RM2 billion to Air Selangor to finance its acquisition of the existing water concessionaires: Syarikat Bekalan Air Selangor Sdn Bhd (SYABAS), Puncak Niaga Sdn Bhd (PNSB), Konsortium ABASS Sdn Bhd (ABASS) and Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH).

In accordance to the master agreement, Air Selangor would in return transfer up to RM2 billion worth of water assets from its acquisitions to federal government-owned PAAB, which will in turn be leased back to Air Selangor to use as the state’s water service provider.

Azmin added that Air Selangor is expected to take over SYABAS and PNSB by this October 1, following when, both will be operating as subsidiary companies before Air Selangor takes over as operator completely next year.

Air Selangor is also required to complete its acquisition of ABASS within four months.

As for SPLASH however, Azmin said Air Selangor is given until July next year as negotiations were still ongoing.

He added that Air Selangor would go ahead with operations even if negotiations do not conclude by March 2016.

“We are given one year to conclude the whole exercise, starting from July 10, the state have started initial discussions with SPLASH, so hopefully we should be able to conclude the whole discussion by July of next year,” he said.

Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili, whose portfolio includes the purview of PAAB, added that RM2 billion has been the fixed ceiling to be provided to Air Selangor for the total of the acquisitions but said that the federal government would wait for the outcome of the SPLASH negotiations before considering raising the ceiling.

“There is about RM300 million left. If the value is more than that, then the state government will have to calculate the total and present it to the federal government,” he said.

“We would like to see the completion to the restructuring and there’s one more company. It is for the state to make the offer to them, and then federal can consider it.”

PAAB was established in 2006 as part of the federal government’s water services restructuring as set out in the Water Services Industry Act 2006.

Its main role is to absorb the assets of water concessionaires of the country’s states and their debts to reduce their financial burdens. The assets are then leased to the concessionaires to provide its services.

With the completion of the master agreement, PAAB takes over RM7.6 billion worth of bonds of the Selangor water concessionaires.