Selangor water restructuring to cost more than RM9.7b

The restructuring of Selangor’s water industry will cost more than the RM9.65 billion initially agreed by the federal and state governments.

Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Johnity Ongkili said the increase is due to the water concessionaires’ liabilities, which were discounted during the initial takeover evaluation.

“The overall cost is also expected to shoot up following an anticipated higher takeover payment to Syarikat Pengeluar Air Sungai Selangor (Splash),” Ongkili said in a written parliamentary reply yesterday.

He was responding to Bandar Tun Razak MP Tan Sri Abdul Khalid Ibrahim who queried whether the Selangor water industry restructuring would cost more than RM9.65 billion and the impact on water tariffs.

“The overall cost includes the financing of the entire equities and liabilities in all the four water concessionaires as well as federal government’s debt under the Selangor government.

“These would influence the adjustment of water tariff rates, mortgage value of Pengurusan Air Selangor Sdn Bhd to Pengurusan Aset Air Sdn Bhd (PAAB) and water assets that would be mortgaged to PAAB,” the minister said.

The Selangor government had offered RM250.6 million to buy out Gamuda Bhd’s stake in Splash. But the offer was shot down by Gamuda, claiming it would incur a divestment loss of RM920 million. Gamuda is seeking for a higher payout.

Air Selangor and Splash were given time until Oct 7 to complete the takeover deal in-line with heads of agreement inked to conclude the takeover with four water concessionaires last year.

Last May, Ongkili said the federal government might revise Splash’s water concessionaire licence if it prevents the Selangor state from taking over the company within the given timeframe.

The minister had also said the government would consider taking over Splash as stipulated under Section 114 of the Water Services Industry Act (WSIA) 2006, to end the impasse over the almost RM10 billion water restructuring exercise.

The negotiations between the Selangor government and Splash until Oct 7, was based on a “willing buyer and willing seller” mechanism. The federal government is not involved in the negotiation.

On Sept 8, 2015, a long-drawn saga over the water restructuring deal between Selangor and the federal government was concluded after both parties inked the final four agreements to conclude the exercise.

The state’s Air Selangor and the federal government’s PAAB signed a set of agreements in accordance with provisions stipulated in the master agreement.

The final agreements allowed the completion of the master agreement and the release of up to RM2 billion from PAAB to Air Selangor to pay for the takeover of water concessionaire companies — Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Puncak Niaga Holdings Bhd, Kumpulan Abass Sdn Bhd and Splash.

In exchange, Air Selangor would transfer up to RM2 billion worth of water assets to PAAB, which will subsequently be leased back to Air Selangor.

Air Selangor took over Syabas and Puncak Niaga from Oct 1 last year. Four concessionaires have agreed over the deal except Splash.

Splash has also been given a one-year grace period from the time the master agreement came into force to renegotiate terms with the Selangor government.