KUALA LUMPUR: Pengurusan Aset Air Bhd (PAAB) only needs to secure an approval in principle from the four water concessionaires in Selangor to prevent the tariff from being increased at the end of this month.

Thus, the takeover of the assets of the water players need not be completed by month-end, Energy, Water and Communications Minister Datuk Shaziman Abu Mansor disclosed yesterday.

“Only an agreement in principle is required,” he told a media briefing here.

The minister also said that PAAB has yet to make a formal offer for the water concessionaires in Selangor.

“We have only spoken (informally), no formal offer in writing as yet,” Shaziman said.

As such, questions as to whether the proposed offer from PAAB would include taking over the debts of the concessionaires have not been addressed yet, he added.

PAAB, a wholly owned company of the Minister of Finance Inc, had stated two weeks ago that it would make an offer to take over the assets of the water concessionaires in Selangor. It said this was imperative to prevent a 31% water tariff hike scheduled to come into effect on March 31.

Shaziman had also said that PAAB’s offer would be higher than the Selangor government’s RM5.7 billion offer for the assets and equity in the four water concessionaires.

The state’s offer only covers the assets and equity but not the debts of the companies. Selangor has said that it would not be responsible for the companies’ debts.

Three of the four concessionaires have flatly declined the offer, saying that it was too low. The four companies are Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Syarikat Pengeluar Air Selangor Sdn Bhd (Splash), Puncak Niaga (M) Sdn Bhd (PNSB) and Konsortium ABBAS Sdn Bhd.

ABBAS, a state government entity, stated that the offer was low but it was willing to renegotiate the terms.

If an agreement in principle is not firmed up with the concessionaires, Syabas will have to be compensated for not increasing the tariff. According to Shaziman, the money will come from both the state and federal governments.

It is learnt that the compensation could be in the region of RM38 million a month but this has yet to be ascertained.

Syabas has the concession to supply water to Selangor, Kuala Lumpur and the federal capital of Putrajaya. It is 70% owned by Puncak Niaga Holdings Bhd. Kumpulan Darul Ehsan Bhd (KDEB), the investment arm of the Selangor state government, has the remaining 30% equity.

Puncak also wholly owns PNSB while Splash is 40%-owned by Gamuda Bhd, and 30% each by Sweetwater Alliance Sdn Bhd and Kumpulan Perangsang Selangor Bhd (KPS), which also comes under KDEB.

On the timing of the offer by PAAB which has drawn criticism, Shaziman said the federal government was not out to scuttle Selangor’s move to take over the water assets and concessions in the state.

He said four extensions had been given to the state government, which is led by Pakatan Rakyat, to make an offer to the water concessionaires.

“The last extension was on Feb 14, they said they will let me know the outcome (of them taking over the assets). But they only made the offer on Feb 13 … then they accused me of only giving them one night … we gave them six months,” an irate Shaziman told the media briefing.

He added that the main aim of the federal government was to ensure that a tariff hike under the concession agreement with Syabas did not take effect.

On the valuation of water assets outside the purview of the four concessioniares, such as pipes and dams, Shaziman said there were some discrepancies. He said PAAB had valued the water assets that belong to the state at only RM1.1 billion.

“Some assets have already been amortised,” Shaziman said.

The state values the assets at some RM9.7 billion.