In what would be a dramatic U-turn, the federal government appears ready to hand over the statutory acquisition of water assets in Selangor back to the state government.
Quoting sources, The Edge today reported that Putrajaya has decided to stand by the letter of mandate it issued to Selangor’s investment arm Kumpulan Darul Ehsan Berhad (KDEB) in February 2008, before the state was taken over by Pakatan Rakyat.
The Malaysian Insider understands that no decision has been communicated between the two governments, whether verbally or in black and white, as the change of heart occurred only after Thursday’s Cabinet reshuffle and has not been ratified at the top level.
Sources say Kumpulan Perangsang Selangor, a unit under KDEB that handles its infrastructural business, had met with top federal government officials explaining a no-win situation for both parties if Putrajaya went ahead in what Selangor claims is a “bail out” for the private concessionaires in the state.
It is however, unlikely that any decision will be made soon as Datuk Peter Chin has taken over the water portfolion from Datuk Shaziman Abu Mansor and will need time to study the complications surrounding the prolonged battle for control over the consolidation of Selangor water assets.
The handover of the assets - such as treatment plants, damns, pipelines - is required under the Water Services Industry Act 2006, which will see all water assets in Peninsular Malaysia and Labuan handed over to Pengurusan Aset Air Berhad (PAAB), a Finance Ministry company, which will then lease the assets back to appointed licensees in each state.
While Selangor owns about 80 per cent of all water assets in the Klang Valley, the newer and therefore more expensive assets lie in private hands, namely Puncak Niaga, Syabas, Splash and Abass.
Selangor made an RM5.7 billion offer to acquire all four companies including their assets but two days before the Feb 20 deadline, the National Water Services Commission (Span), the regulatory body under the then Ministry of Water, Energy and Communications, declared that the federal government would commence negotiations with the concessionaires.
Span claimed that the state was taking too long to conclude matters as a scheduled 30 per cent tariff hike would come into effect on April 1 based on the concession agreement with Syabas. The hike could however, be avoided if the assets were handed over in time and a new licensee deal struck.
Selangor cried foul over an effective sabotage of the deal as it claimed this made PAAB a competitor in the acquisition of the privately held water assets.
However, Selangor had also made an official complaint over Syabas’ non-compliance with the concession agreement, calling on Putrajaya to cancel it, thereby lifting the April 1 deadline.
Despite the statemate over the water assets, no tariff hike has been announced, reflecting the delicate political scenario over water supply for some 1.5 million customers in the Klang Valley.