Can Azmin rescue Selangor’s water deal?

By Khairul Khalid

Barely six months into his tenure as Selangor MB, Azmin Ali faces arguably his toughest test yet – making sure that the state’s RM9.65 billion water restructuring plan stays on track.

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Can Selangor Menteri Besar (MB) Azmin Ali rescue the state’s water consolidation plans?

It looks like the water agreement, controversially signed last September between Azmin’s predecessor Abdul Khalid Ibrahim and Putrajaya, is headed for another long standoff.

The water negotiations will be a stern test of Azmin’s leadership credentials and negotiations skills, just six months into his tenure as MB.

The tricky negotiations over ownership and control, still ongoing, will set the tone for Azmin’s further dealings with Putrajaya.

Both sides aren’t likely to give in easily.

The water restructuring seemed to be on the right track in January when shareholders of Puncak Niaga Holdings Bhd finally approved the RM1.5 billion sale of its water assets to Selangor after protracted negotiations.

The deal was  for the disposal of Puncak Niaga Holdings Bhd’s 100% stake in Puncak Niaga (M) Sdn Bhd and 70% stake in Syabas (Syarikat Bekalan Air Selangor) to Selangor state agency Pengurusan Air Selangor Sdn Bhd.

Selangor’s private water concessionaires are Konsortium Abass, Puncak Niaga, Syarikat Bekalan Air Selangor (Syabas) and Syarikat Pengeluar Air Selangor (Splash). Under the consolidation plans, the state wants ownership and control of the water industry back from the concessionaires through a buy out of the latter’s water assets.

Splash was the remaining holdout due to a long standing disagreement over valuation of its assets.

Now, the Puncak Niaga sale has fallen by the wayside due to the Selangor-Putrajaya standoff and the collapse of the entire water deal.

At the time of writing, the MB and his team remain locked in negotiations with the federal government, led by Kettha (Ministry of energy, green technology and water) minister Maximus Ongkili, to revive the water agreement.

There has been no indication by either party how long these negotiations will take although both parties maintain that it can be resolved.

Will this be a prelude to another long, drawn out water saga?

A few weeks ago, the state abruptly cancelled the water deal, claiming that the federal government had violated the master agreement.

Azmin rejected Putrajaya’s request for another extension to finalise the deal. Both parties cited disagreements over land matters linked with the 26,000 km of pipes belonging to the water concessionaires.

The MB claimed that Putrajaya wanted “free land” and this would jeopardise the sovereignty of Selangor.

Both parties claim some misinterpretation of the original agreement inked last year between Putrajaya and Khalid.

The Selangor water committee, led by the opposition Pakatan Rakyat’s (PR) party leaders, representatives said that the ‘gentleman’s agreement’ between state and federal governments had been breached and warned of a potential crisis.

The ‘gentleman’s agreement’ was for Selangor to facilitate the federal government in fast tracking the construction of the RM9 billion Langat 2 water treatment plant, which for a long time the Selangor administration had deemed unnecessary.

In return, Putrajaya would work to resolve the restructuring of several water concessionaire companies operating in the state.

“The dispute started when the federal government claimed that the Semenyih and Bukit Nanas dams, along with thousands of kilometres of pipes in the state, belong to Putrajaya, while the Pakatan government claimed otherwise,” said the Selangor water committee in an official statement.

The PR leaders confirm that assets such as dams and rivers from where the water is sourced, are state government assets.

Reminiscent of previous years’ deadlock, the state and federal governments have already started to send some conflicting statements about the negotiations.

For example, after the deal collapsed recently, Azmin claimed that land was never part of the original deal between Khalid and Putrajaya. Ongkili said that it was.

Subsequently, after a round of negotiations, Ongkili claimed that the state had agreed to give the federal government access to the land where the water pipes were located. Azmin then denied this.

This back-and-forth between MB and minister recalls the tedious water saga last year, during which former MB Khalid and Ongkili also sent out mixed messages during negotiations for the water takeover.

When contacted by KiniBiz, several of the Selangor water committee members declined to give further comments on details of the negotiations. Much of the the water agreement is shrouded in secrecy because it falls under the the OSA (Official Secrets Act) and is not open to public scrutiny.

“There are a few thorny issues but let’s see how the ministry responds. It’s best the MB speaks,” said Klang MP (member of parliament) Charles Santiago to KiniBiz.

The MB’s office has not responded so far to KiniBiz’s enquiries about the ongoing water issue.

If the water negotiations fail, it would be a big blow to both state and federal governments, as well as people in Selangor who thought that the long standing water saga was close to a conclusion.

The federal government had approved the state takeover of water assets from the private concessionaires in April last year.

Subsequently, Putrajaya even invoked WSIA (Water Services Industry Act) to break the deadlock, 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.

WSIA allows for an enforced takeover of the concessionaires, although the federal government never really acted on this, still insisting on a “willing buyer, willing seller” agreement between state and concessionaires.

Negotiations dragged on for months due to a dispute between Selangor and the water concessionaires on valuation of the assets.

The water restructuring saga in Selangor has dragged on for more than seven years, precipitated  by the opposition coalition Pakatan Rakyat (PR) taking over the state in 2008

Many fear that it would have a negative long term effect on the economy.

The water industry in Selangor was privatised in 1994 under the Barisan Nasional (BN) led state government.

Last year, severe water rationing, dry spells and critical water levels at dams combined to create economic uncertainty and psychological anxiety on residents in the Klang Valley.

There are close to seven million residents in Klang Valley (almost a quarter of Malaysia’s population) and billions of delayed investments could cripple the economy of the nation’s richest state and by extension the country’s.

Tomorrow: Selangor’s water limbo – will history repeat itself?