Friday, October 07, 2011

IWK Should Be Returned To Local Councils

We welcome the reply by Finance Ministry to my question in parliament today as to whether the Indah Water Konsortium will be privatised to 1MDB together with other private entities such as Puncak Niaga Holdings Bhd.

When asked to confirm if the IWK will be privatised in whatever form to 1MDB, the Deputy Finance Minister, Datuk Donald Lim has responded that it will not. He has further added that IWK will instead be restructured and placed under the Ministry of Energy, Green Technology and Water.

However, we would like to call upon the Government to take a further step of decentralising the IWK sewerage treatment and management business, and returning it to their respective local councils. The IWK was formed in 1994 as part of Dr Mahathir’s privatisation initiative and took over all the relevant functions from the local government authorities. To ensure increased effectiveness and greater responsiveness to issues faced by the people, it is crucial that the local councils are empowered to manage its services.

The centralisation of IWK services has resulted in a costly privatisation exercise where the Government was bailed out IWK from its concessionaire with RM192 million in 2000. The exercise has since resulted in further cost to the government amounting to RM1.2 billion to make up IWK’s operational deficits since then.

We would warn the Government against reversing the decision to reject 1MDB’s privatisation proposal, especially when attempting to privatise to parties which are facing financial difficulties such as Puncak Niaga Holdings Bhd. The latter had recently announced that its shareholder’s funds have plunged to RM36 million breaching the Practice Note 17 guidelines of a minimum of RM40 million of Bursa Malaysia before receiving reprieve from Bursa to regularise its position by June 2012.

Should the Government decide at any point of time to revive the privatisation exercise, such exercise must be conducted in an open, competitive and transparent manner to ensure that the interest of the rakyat is prioritised, and the cost to the Government minimised.
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