Monday, December 14, 2009

Water Talks: Don't Blame Selangor Government

In an interview with The Star Bizweek on Saturday, Pengurusan Aset Air Berhad (PAAB) CEO, Ahmad Faizal Abdul Rahman blamed the Selangor Government for the delays in the state's water consolidation exercise where talks have exceeded a year. It was highlighted that “long after being adamant about leading such talks, the Selangor government recently threw in the towel” and “requested that PAAB to step in to lead the talks.”

Firstly, it should be noted that the State Government has not requested that PAAB step in to lead the talks.

Secondly, the failure of the water talks to date is not due to the Selangor Governnment. Instead it is the Federal Government's insistence that SYABAS remains the concessionaire for water distribution in the state. During the negotiations, the state government had even accepted a compromise proposal where SYABAS will remain 51% majority shareholder of the during the negotiations with the conditions that an independent professional management as well as equal board representation. However, even these highly reasonable terms were refused by both SYABAS and the Federal Government.

The fact that the Federal Government had been secretly negotiating a RM320 million interest free, unsecured and backloaded 20-year loan facility to SYABAS serves only to prove the Federal Government's bad faith in the entire water talks, for while the state government is negotiating hard the terms of the new concession, the Federal Government is offering SYABAS a way out for its major cashflow problems which disincentivises the need for SYABAS to deal with the state government.

The absolute lack of commitment on the part of the Federal Government is clear when the Minister refuses to use its powers to cajole SYABAS to the negotiating table with the State Government. Now that PAAB is conducting the negotiations however, Faizal can now claim during the interview that “there's not much room for negotiations”, for the concessionaires have to “take it or face arm-twisting with a fistful of the law. Section 114 of WSIA gives power to the Energy, Green Technology and Water Minister to force water players to hand over the assets for the sake of 'national interest'”.

Faizal has also admitted to favouring the concessionaires with terms such as “certain things previously not recognised as assets are now recognised as assets. Otherwise its not palatable to the concessionaires.” In addition, he also disclosed that PAAB will be taking into account the fact that the concessionaires “liabilities are much higher than the tangible assets”, which means the rakyat will have to bear the liabilities of these concessionaires as part of the taking over of water assets.

The process undertaken by PAAB as explained by Faizal is not a consolidation or restructuring of the state's fragmented water industry with multiple players. All PAAB is doing is to purchase the 4 concessionaires assets at high prices but will continue to issue operating and maintenance license to them. In essence, PAAB is only bailing out of the troubled concessionaires while the fragmented industry remains.

The Selangor state government has definitely not thrown in the towel, for it is our responsibility to ensure that the rights of the rakyat are fully protected and not allow them to be taken advantaged of by the concessionaires. We will, over the next few weeks, take all necessary actions to ensure that our goals for the people of Selangor are achieved.
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