By Khairul Khalid
The Selangor state government expects to complete its water restructuring within 3-6 months, said Selangor Menteri Besar (MB) Khalid Ibrahim in an official statement.
“The state has submitted an action plan to the minister of energy, green technology and water (Kettha) Maximus Ongkili in a letter dated 21 May 2014,” said Khalid.
Recently the federal and Selangor state governments announced a RM5.58 billion takeover of water concessionaires Puncak Niaga Holdings Bhd (PNHB) and Syarikat Bekalan Air Selangor (Syabas).
Puncak Niaga owns two of the four water concessions in Selangor including a 70% stake in Syabas, the sole water distributor of water in the state. The other water concessionaires are Syarikat Pengeluar Air Selangor (Splash) and Konsortium Abass, a wholly-owned subsidiary of Selangor state.
The MB is confident that a solution can be reached and states that there is intensive discussion ongoing between the parties involved including state agency Kumpulan Darul Ehsan Bhd (KDEB), the water concessionaires, federal government agencies such as Suruhanjaya Perkhidmatan Air Negara (SPAN) and Pengurusan Aset Air Bhd (PAAB) as well Kettha as a facilitator.
Khalid also lists out some of the implementation scheduled in the restructuring process:-
1. KDEB to issue an offer letter to the shareholders of the three respective concessionaires (PNHB, Syabas and Abass).
2. To form a joint-committee for the implementation of Langat 2.
3. The federal, state government, PAAB and KDEB to initiate discussion on a master agreement which will set the principles for migration to the model under WSIA (Water Services Industry Act) including the transfer of assets, settling of loans from the federal to the state government for the development of water supply system and other matters related to the licensing of services to the new water asset owners and operators.
4. KDEB and PAAB to undertake a due diligence process on the three concessionaires. PAAB needs to verify the value of the water assets that will be taken over, KDEB needs to verify the equity value and asset transfer of PNSB (Puncak Niaga Sdn Bhd) and those that involve PNHB.
5. To sign a share sale agreement between KDEB and the shareholders of PNSB, Syabas and Abass.
6. To undertake a thorough review of the head of agreement and the agreement between Kettha, state government, PAAB and KDEB and the attorney general’s office, ministry of finance, economic planning unit (Epu) and public private partnership unit (Ukas).
Splash is the remaining water concessionaire to stall on a deal with the state government. They have been adamant that Selangor’s last takeover offer falls well short of their NAV (net asset valuation) of RM2.5 billion.
Splash is 40% owned by Gamuda, 30% by Kumpulan Perangsang Selangor (a unit of KDEB) and 30% by businessman Wan Azmi Wan Hamzah.
The government has also announced that enforcing Section 114 of the WSIA will not be necessary to consolidate Selangor’s water assets, despite cabinet approval.
To recap, early last month, the federal government enacted WSIA after three out of the four concessionaires failed to agree on the last offer of RM9.65 billion stated in the MoU (memorandum of understanding) to resolve the longstanding water restructuring issue.
Section 114 of WSIA provides for the forced takeover of the water assets under circumstances of national interest.
Nevertheless, despite the cabinet’s approval of WSIA, there has been reluctance by the federal government enforce it and Putrajaya has still insisted for a “willing buyer willing seller” deal between state and concessionaires.
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