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S’gor and fed govts yet to start water asset talks

SHAH ALAM, 26 Feb 2009: The water review panel, formed by the Selangor government to review the restructuring of the water industry in the state, has yet to begin negotiations with the federal government for the acquisition of its water assets.

One of the panel members, Professor Dr Subramaniam Pillay, told a media briefing the federal government had not met the panel to negotiate the takeover of the state’s assets, which include piping systems and 27 treatment plants worth about RM9 billion.

The water industry concessionaires in Selangor, namely Puncak Niaga (M) Sdn Bhd and Syarikat Pengeluaran Air Selangor Sdn Bhd (SPLASH), each owns a water treatment plant in the state, said Subramaniam, who is associate professor at the Notthingham University campus in Malaysia.

Pengurusan Aset Air Bhd (PAAB) has moved in to negotiate directly with the four water concessionaires in the state, namely Puncak Niaga, SPLASH, Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) and Konsortium ABASS Sdn Bhd (Abass) in the restructuring of the water industry.

Under the initial restructuring plan, the Selangor government via state-controlled company, Kumpulan Darul Ehsan Bhd (KDEB), would take over the concessions and assets to hand them over to PAAB, a wholly-owned company under the Ministry of Finance Inc.

The assets would then be leased back to KDEB as the sole licensed operator, as after the restructuring, there would be no more concessionaire, he said. Instead, a licence would be issued to the operator, subject to a review by the federal government, he said.

The four concessionaires rejected an offer by the state government to take over their assets and concessions for RM5.7 billion (RM1.1 billion for concessions and RM4.6 billion for assets) on 20 Feb, he said.

Among the reasons cited in a news report was that the offer was lower than expected.

However, another panel member, Tony Pua, said the state government believed that if it was given the licence to be the sole operator of the industry, it could provide cheaper water tariff to the public, due to the existing economies of scale in Selangor. He said the state government would also be able to maintain the free water policy for the first 20 cubic metres.

At present, the average price per cubic metre of water in Selangor for domestic use is 77 sen, said Pua, who is also Petaling Jaya Utara member of Parliament.

He said with the existing economies of scale in Selangor, the water tariff could be brought down by 10% to 69 sen this year, and by 25% to 57 sen in 2013.

He said this could be done through better management of the water industry, adding that Penang, which is smaller than Selangor, has proven it could supply water for domestic use at 37 sen per cubic metre.

Should the state government fail to hand over its water assets to PAAB by 31 March, the water tariff could shoot up by 37%.

There is also talk that Syabas would likely get the licence if the federal government took over the state water assets, said Pua. — Bernama

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