State to take over water treatment, supply firms

2008/05/27 NST
State to take over water treatment, supply firms

THE state government will take over all four companies involved in the treatment and distribution of water in Selangor.

Menteri Besar Tan Sri Abdul Khalid Ibrahim said the takeover would be carried out through its wholly-owned company, Kumpulan Darul Ehsan Bhd, with the move to be finalised by September.The companies involved are Puncak Niaga Sdn Bhd, Syarikat Bekalan Air Selangor (Syabas), Konsortium Abass Sdn Bhd and Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash).All are involved in the treatment of raw water, with Syabas also handling water distribution in the Klang Valley. Puncak Niaga's subsidiary, Syabas, has the concession to distribute water in Selangor and also owns 29 water treatment plants.

Konsortium Abass has the concession to operate and maintain the Sungai Semenyih Water Supply Scheme while Splash is the concessionaire of the Sungai Selangor Water Supply Scheme phase 1 and 3. With this move, Abdul Khalid said the state would have a free hand to review all concessionaire agreements, which he had described as lopsided. Abdul Khalid said KDEB would acquire all the shares of these companies, adding that the cabinet had given the nod for the deal in January.He said the Energy, Water and Communications Ministry had issued a letter to the state government on Feb 5 giving the approval.He said though it was the previous government that initiated the move, it was more for economic restructuring.The scheme to provide free water for the first 20 cubic metres was included in the reorganisation scheme.Abdul

Khalid said he would meet with ministry officials to find an amicable evaluation for the restructuring exercise. Asked how much the takeover will cost he said: "It will cost money to buy. But it is viable in returns to KDEB. It will not be to the extent that the risks and returns are not acceptable to the people."Abdul Khalid said KDEB had shares in some of these groups. In the takeover, it would offer cash or shares for acquisition of rights in the companies.He said it would also be done through purchase of assets and offers of long-term financial facilities at certain rates.He said Selangor would study the terms of the companies' agreements and their financial models. "We will ensure the benefits flow back to the people."Asked what would happen if the concessionaires refused to sell the companies, he said they would if the price was right."Even if they refuse, they will have to eventually as the water belongs to the state."