No tariff hike amid Splash takeover, says Selangor MB

All processing, treatment and treated water supply will be centralised at Air Selangor by 2019

By AFIQ AZIZ / Pic By MUHD AMIN NAHARUL

There will be no water tariff hike in Selangor, Kuala Lumpur and Putrajaya, following the acquisition of Syarikat Pengeluar Air Selangor Holdings Bhd (Splash) by Pengurusan Air Selangor Sdn Bhd (Air Selangor) last Friday.

Bernama reported Selangor Mentri Besar (MB) Amirudin Shari as saying that the water tariff will be based on the government’s capability in the future.

“At the moment, there is no (water tariff) hike and we will continue the free water programme that cost RM180 million a year, although it did increase many times since its inception (in June 2008) at about RM70 million a year,” he was quoted as saying in a news report yesterday.

On Saturday, former MB Tan Sri Abdul Khalid Ibrahim had said users would have to brace for an increase in water tariffs as state-owned Air Selangor paid 10 times the price to buy Splash.

Amirudin, however, explained that Splash’s purchase value was relevant because it was based on the expected appropriate price by the international independent appraisal body appointed by the state government.

The proposed RM2.55 billion acquisition last Friday marked the end of the state’s 10-year water restructuring impasse. About 6.4 million water users have been affected with various water supply disruptions over the years.

During the handover of the offer letter ceremony last week, Amirudin revealed that discussions were ongoing for more than a year before both sides agreed to the 28% discount which derived from Splash’s June 2018 net book value — rated at RM3.54 billion.

“It is the conclusion to the restructuring of water supply industry for Selangor, Kuala Lumpur and Putrajaya.

“We project all water concessionaires would be terminated by the end of this year and all processing, treatment and treated water supply will be centralised at Air Selangor by 2019,” Amirudin told reporters last Friday.

He said Air Selangor will make an upfront payment of RM1.9 billion and the balance RM650 million will be paid via instalments over nine years.

He said the takeover does not involve any allocation from the state government and the long-term payment will ensure Air Selangor can be operated at a reasonable and lowest cost.

“The takeover also will offset the outstanding loan by Syabas (Syarikat Bekalan Air Selangor Sdn Bhd) to Splash amounting to RM4.7 billion till June 30,” Amirudin added.

The MB was speaking at the handover of the offer letter from Air Selangor CEO Suhaimi Kamaralzaman to Splash chairman Tan Sri Wan Azmi Wan Hamzah, who owns 30% of Splash, last Friday.

Gamuda Bhd and Kumpulan Perangsang Selangor Bhd (KPS) own 40% and 30% of Splash respectively.

According to Bursa Malaysia statements, the transaction of sales and purchase agreement must be made before Sept 14, 2018. It also stated that 50 million ordinary shares and 350 million redeemable unsecured loan stocks offers are valid until Aug 10, 2018.

“With the proposed acquisition by Air Selangor, we are a step closer to not only the resolution of the water sector restructuring in the state, but also a closure for us,” KPS CEO Ahmad Fariz Hassan said in a statement.

Gamuda, however, said it will make the appropriate announcement in due course after going through due process internally and with Splash.