S’gor says it’s still in the water game

Business & Market 2009

Written by Fong Min Hun

Thursday, 02 July 2009 11:09

SHAH ALAM: Selangor said that it was still in the game for consolidating the water assets in the state by maintaining that negotiations with two of the four water concessionaires in the state were ongoing.

In a statement yesterday, Menteri Besar Tan Sri Khalid Ibrahim said that to-date only Puncak Niaga Bhd has conclusively rejected the state’s offer.

“Negotiations with two other concession companies — Syarikat Pengeluar Air Selangor Sdn Bhd (Splash) and Syarikat Bekalan Air Sdn Bhd (Syabas) — are ongoing and the state hopes it will be concluded in the near future,” he said.

“The state is in the midst of resolving an outstanding issue on subcontracts with Splash whilst Syabas is awaiting the formal blessing of the federal government to respond to the state’s offer.”

It is learnt that the negotiations with Splash are likely related to the operations and maintenance (O&M) work in relation to the water treatment plants after the takeover by the state government.

The announcement by the state comes as a surprise as Gamuda, which holds 40% of Splash, on Monday had announced that it was unable to accept the Selangor government’s offer of RM2.97 billion for Splash.

In a statement to Bursa, Gamuda Bhd cited disagreement over the method of valuation as well as “the absence of the state government’s firm commitment on the position of the existing operations and maintenance operators”. The remaining 60% of Splash is evenly owned by The Sweet Water Alliance Sdn Bhd (TWSA) and Kumpulan Darul Ehsan Bhd.

Last week the state made an improved offer to the four water concessionaires in the state. They are Konsortium Abass Sdn Bhd which is 55% owned by Kumpulan Perangsang Selangor Bhd, Splash, Syabas and Puncak Niaga Sdn Bhd (PNSB).

Tan Sri Rozali Ismail-controlled Puncak Niaga Bhd wholly owns PNSB, which owns 27 water treatement plants in the state and 70% of Syabas, the distributor of treated water for Selangor and the Federal Territory. The remaining 30% of Syabas is equally divided between Kumpulan Darul Ehsan Bhd (KDEB) and its 60%-owned subsidiary Kumpulan Perangsang Selangor Bhd (KPS).

Only Konsortium Abass accepted the state government’s new offer of RM946 million for its assets and liabilities.

Puncak Niaga in an announcement last week to Bursa rejected the improved offer of RM1.94 billion for PNSB and RM3.36 billion for Syabas on the grounds that it disagreed with the valuation methodology. Last February, the state offered RM1.6 billion for PNSB and RM1.5 billion for Syabas, without absorbing the liabilities.

With respect to the offer for Syabas, Puncak Niaga said Syabas’ board and shareholders could not come to a decision on the RM3.36 billion offer because of built-in provisos in their existing concession agreement whereby deliberations on any take-over offer need prior approval from the federal government .

“To date, Syabas has not received or been informed of any instruction or decision from the federal government in respect of the same,” Puncak had said last Monday.

With the state still committed to taking the lead in the consolidation of the water assets, it is unlikely that that the federal government will intervene anytime soon to deal with the water concessionaires directly.

The state government said in the same statement that it would be discussing the next step with the Minister of Energy, Green Technology and Water Datuk Peter Chin Fah Kui.

This article appeared in The Edge Financial Daily, July 2, 2009.

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