KDEB expected to bid for Selangor water ops

By Francis Fernandez
Published: 2008/07/07
BTimes

KUMPULAN Darul Ehsan Bhd, Selangor's investment arm, will make an offer this month to take over the entire water operations in the state, after the federal government's assurances that it will help fund a buyout plan, a top official of the state said yesterday.Speaking on condition of anonymity, the official said the exercise could cost as much as RM6 billion, almost half of what was speculated by the market.KDEB president Datuk Abd Karim Munisar in a statement said: "We have been notified that the federal government has set up a funding mechanism through Pengurusan Aset Air Bhd (PAAB) to take over the assets and liabilities ... and will be responsible for the funding of any future capital expenditures."He added that KDEB is examining various funding options with an aim to end monopolisation of water tariffs by the privately-owned water concessionaires by September.

Business Times was told that Abd Karim was instrumental in securing the backing, which culminated with an in-depth briefing to Deputy Prime Minister Datuk Seri Najib Tun Razak early last month."Abd Karim's central contention was the consolidation must take place this year, before the one third increase in Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) water tariff come into play, as it, would spike up valuations, and lead to an increase in water tariffs to consumers," said the official, adding if the deadline is met, there is unlikely to be a rise in water rates next year. Puncak Niaga Holdings Bhd owns 70 per cent of Syabas, which oversees the water supply service and distribution for Selangor, Wilayah Persekutuan Kuala Lumpur and Putrajaya, while Gamuda has a 60 per cent stake in Syarikat Pengeluar Selangor Holdings Bhd (Splash), the concessionaire for the Sungai Selangor Water Supply Scheme Phases 1 and 3.Gamuda's stake has been valued by the research community at about RM1 billion, while KDEB is still mulling two alternatives on Syabas, as Puncak Niaga has been difficult to convince, reportedly offering alternatives, centered on it leading the consolidation exercise.Business Times understands that KDEB is looking to revisit a February representation to buy Puncak's stake in Syabas, or to make an unsolicited offer at not more than RM3.50 a share to the shareholders of Puncak Niaga to take the company private.