Monday, July 12, 2010

Syabas: Muhyiddin to the Rescue!


DPM Muhyiddin should drop the pretense of supporting UMNO crony, Syabas who is facing major financial troubles, by blaming the Selangor state government

The Deputy Prime Minister Tan Sri Muhyiddin Yassin yesterday warned that “a water crisis is on the way” and because the Pakatan Rakyat state government offered free water to the rakyat, “they are running into a huge deficit, a huge debt”.

Tan Sri Muhyiddin went further to slam Selangor Menteri Besar of “ill-management” claiming that Tan Sri Khalid Ibrahim “does not know about managing the state government. If there are no resources to fund the payment to the water concessionaires, Selangor will become bankrupt.”

Tan Sri Muhyiddin's outburst is clearly a ill-disguised attempt at supporting and protecting Syabas, who together with its parent company, Puncak Niaga Holdings Bhd is facing serious financial problems, including bonds amounting to more than RM6 billion and outstanding debts to water treatment plants amounting to hundreds of millions.

The Deputy Prime Minister obviously got his fact wrong for the “free water” is financed almost totally from profits arising from its minority interest in the water companies such as SPLASH and ABASS via the state's wholly-owned subsidiary Kumpulan Darul Ehsan Bhd (KDEB).

The Selangor state government, despite the “free water” subsidy of RM120 million per annum has been able to maintain a balanced budget because the government was able to save its money through its prudence, as well as the reduction of corruption. Hence unlike the Federal Government who is mired in huge deficits, the Selangor state is in no danger of bankruptcy.

We should instead ask the Deputy Prime Minister, why did the Barisan Nasional Federal Government, together with the then BN Selangor Government sign such an unfair privatisation agreement with Syabas, allowing them to increase water tariffs at ridiculous rates of 37% in 2008, 25% in 2011, 15% in 2014 and 10% every subsequent 3 years from then onwards? Why did BN sign an agreement which sought only to enrich Umno cronies, and impoverish the rakyat?

Despite the fact that Syabas had breached various terms of the concession agreement, if not for the fact that Pakatan Rakyat won in the last general elections, the company would have enjoyed substantial increase in tariff rates, reaping lucrative profits as a result.

The Federal Government instead of looking after the interest of the rakyat, has chosen to provide Syabas with a RM320 million 20-year back-loaded unsecured interest free loan which will in turn cost the Government at least RM240 million in interest payments to banks and bondholders. We'd like to ask Muhyiddin why is the Federal Government using the tax-payers' monies to bail-out and subsidise a private company?

While Syabas is clearly in trouble, the Selangor government has offered to acquire and consolidate the water industry in the state which will result in lower water prices while maintaining the free water policy, the Federal Government has chosen instead to oppose the exercise. Instead, the Federal Government chooses to maintain support to Syabas and Puncak Niaga to control the state's water industry, for no reason other than to help the BN cronies.

What's completely laughable was Tan Sri Muhyiddin's attempt to demonstrate his experience with water management, “the costs of maintaining the processing of water is too high. I was the Johor Mentri Besar once, I know how much it can cost, up to RM20 million a year (during my time).”

Unfortunately, his legacy in Johor resulted in the privatisation of the water company and today, Johor has one of the highest, if not the highest water tariff rates in Malaysia! The Deputy Prime Minister must be so proud.

We call upon the BN government to allow and support the Selangor government's initiative to consolidate the industry under the state, which will not only save Syabas from its agony, eliminate the need for the Federal Government to give interest free loans and most importantly allow the people of Selangor and Kuala Lumpur to enjoy improved water services at lower prices.
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