Wednesday, February 25, 2009

Offer to Water Concessionaires Sabotaged

As highlighted in the earlier blog post, the Selangor Government's offer to acquire the assets and concessions from the privatised water companies in the state was sabotaged by the Federal Government in a most shocking manner, and it certainly reeks of another mega bailout for failed privatisation projects.

The Selangor Members of Parliaments involved in the above acquisition exercise issued another statement yesterday to the above effect, as follows:

Federal Government Sabotaged Offer by Selangor Government to Acquire Water Assets and Concession in the State

The Selangor state government made an offer to 4 privatised water service providers – Puncak Niaga Sdn Bhd (PNSB), SYABAS, SPLASH and ABASS to acquire their water assets and concessions on the 13th February 2009.

The combined RM5.71 billion offered was made with the objective to deliver the lowest possible water tarriffs for the residents of Selangor and Kuala Lumpur. At the same time, the offer was consistent with, and guided by the terms and conditions specified in the concession agreements signed willingly by all parties involved. It was a comprehensive offer because it encompasses the audited asset value of all water-related assets as well as a very fair and reasonable return to the capital invested by the respective concessionaires.

However, before the concessionaires are able to respond to the state government's offer by the 20th February, we are shocked that the Ministry of Energy, Water and Communications, via Dato Teo Yen Hua, CEO of National Water Services Commission (SPAN) announced on the 18th February that the Federal Government will proceed to negotiate directly with the water concessionaires.

Instead of supporting the state's offer, SPAN intentionally threw a spanner in the works to sabotage the Selangor state's attempt at delivering the lowest possible water tarriffs to her people.

For with an alternative competing offer which will not only encompass higher cash valuation but also more lucrative terms and conditions from the Federal Government, SPAN has single-handedly destroyed any likelihood of a positive response from the concessionaires to the state government.

Therefore with SPAN's interference, it was not surprising that the concessionaires rejected the state government's offer on 20th February, last Friday. We will like to call upon the Minister to explain the actions of his Ministry for sabotaging the efforts of the Selangor State Government.

We will like to reiterate our position that if the offer from the Federal Government to acquire these assets and concessions at the same or lower price than what the Selangor state government has offered, we will not only agree to letting the Federal Government lead the negotiations, but also provide the Ministry with our full support and co-operation.

If however, the Ministry offers the concessionaires a much higher cash value for its assets as well as lucrative license terms for them to continue as the water operators in the state, the Minister must explain why he is forsaking the rights and interest of 7.3 million population of Selangor and Kuala Lumpur.

We will also like to emphasize to the Minister that under the law, particularly the Water Services Industry Act 2006, as well as the terms of the current concession contracts, the Selangor state is a counter-party to all previous and future agreements. Hence the attempt by the Federal Government to unilaterally negotiate with the concessionaires is illegal and will be subjected to future dispute and complications.

Therefore, we call upon the Federal Government to respect the rights of the State and let the Selangor Government proceed with the negotiations with the concessionaires in the interest of the people of Selangor and Kuala Lumpur.
Post a Comment