Source : Malaysian Insider
By Shannon Teoh
KUALA LUMPUR, Feb 17 – The Selangor state government has hit back over claims that its offer to acquire privately-held water supply assets in the Klang Valley is too low.
Parliamentarians who are part of its water review panel overseeing the restructuring of water service in the state said that this analysis was based on the assumption that the private companies should be compensated for loss of profits due to the cancelling of concession agreements.
Instead, the Pakatan Rakyat MPs contended that the offer was made based on the book value of the companies and a reasonable return on the equity invested, which they insist comply with the terms and conditions under the concession agreements.
“When the concessions were signed, they were given profits, and now when we are buying back, should they be given another round of profits?” said Tony Pua (DAP-Petaling Jaya Utara).
Selangor had on Friday offered RM2 billion to Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) and RM3.1 billion to Puncak Niaga Holdings Bhd’s wholly-owned Puncak Niaga Sdn Bhd (PNSB) and its 70 per cent-owned Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) to take over their water assets and operations.
The Malaysian Insider had also reported that an offer of RM5.7 billion was on the table for the above companies and Konsortium ABASS Sdn Bhd, of which RM1.1 billion had been allocated as fair returns on its equity investments.
However, recent media reports suggested the offers were too low, cynical and without basis.
Pua, along with Charles Santiago (DAP-Klang), William Leong (PKR-Selayang) and Dzulkifli Ahmad (Pas-Kuala Selangor) said that future profits based on the discounted cashflow model was not applicable in the case of water concessions.
“If we were to acquire McDonald’s, it would be fair to do so. However we are acquiring government concessions in this case. The government should not be paying for future profits for licenses and rights which it had itself granted,” Pua added.
Santiago also said that in the case of Syabas, it had broken several conditions in its concession agreement and as such, did not deserve any compensation.
He added that the state had written to the federal government asking to cancel the agreement over a month ago.
Leong added that the restructuring exercise where all water assets – treatment plants, dams, pipelines – in Peninsular Malaysia would have to be transferred to the federal government under the Water Industry Services Act 2006 was meant to reduce the cost of water supply.
“But if we pay full compensation, then the cost remains the same and the burden falls back on the people and it defeats the purpose of the Act,” he explained.
The companies have up to this Friday to respond to the offers but Pua said that given the response given by sources within the private companies seen in media reports, it was obvious that they would reject the offers.
However, Pua wants them to come to the negotiation table in any case and called for the support of Energy, Water and Communications Minister Datuk Shaziman Abu Mansor to exercise his powers under the Act which binds all parties to what he decides is in national interest.
Dzulkifli also called on Shaziman to back Selangor in keeping the water deal within a range that would not displace the cost to some 1.5 million consumers within Selangor, Kuala Lumpur and Putrajaya.