Thursday, May 26, 2011

RM6.5 billion Selangor water bonds bailout

BN Government's RM6.5 billion bailout of Selangor privatised water companies has jeopardised the people's chance of securing a long-term deal to enjoy quality water supply at the lowest water prices.

It has been reported in the media that the BN Federal Government has decided to bail out the debts of the Selangor privatised water companies to the tune of RM6.5 billion. This move has in effect killed any remaining possibility of the Selangor state government striking a deal with these companies to restructure and take over the water industry in Selangor.

The debts of these water companies were at risk of default after they were unable to meet their installment earlier this year. Of the four companies, Puncak Niaga Sdn Bhd and its subsidiary, Syarikat Bekalan Air Negeri Selangor (SYABAS), had debts amounting to more than RM4.2 billion.

The failure of these companies to service their debts, had no bailout been offered by the BN Administration, would have necessitated these companies to come to the table and negotiate the terms of restructuring with the Selangor state government or other parties which has made offers to acquire the businesses and assets.

The Selangor state government has made a third offer amounting to RM6.3 billion into acquire these water companies, and taking over their debts obligations. In addition, the state government is able to ensure that there will be no water tariff hikes post restructuring. Gamuda, through its subsidiary Pengeluaran Air Selangor Holdings (SPLASH) has also made an offer to acquire the same companies for RM10.8 billion, a figure including the existing debts.

However as a result of the Federal Government bailing out the massive debts, they have relieved these companies of their cash flow problems. This will mean that there is now no urgency for these companies to agree to any form of restructuring as desired under the Water Services Industry Act (2006) as they now have the upper hand at the negotiating table at the expense of the rakyat.

In fact the likely outcome from the bailout is that the Federal Government will follow up with the taking over water-related assets will be these privatised water concessionaires will continue to able to operate and profit from the provision of water services in Selangor, without having to be burden by debts which have been accumulated over the years.

The result is clearly a loss for the people of Selangor for they have lost an opportunity for the privatised water industry to be truly restructured to ensure quality water prices are to be provided at the lowest possible prices.

The Minister of Energy, Water and Green Technologies, Datuk Peter Chin must immediately provide clarifications for the move to bail out the debts of the water concessionaires before a restructuring deal is finalised, at the expense of the people’s interest. He must also fully disclose at the same time the means and terms of repayment to the Government by these concessionaires with the Government taking over these debts.

Finally, the bailout debunks all earlier claims by the BN Government that it is acting in the interest of the rakyat, and serves to prove that it is only interested in protecting the interest of its political cronies above everything else.


Anonymous said...

In the GE, PR can point that the govt has RM6.5b to bailout syabas, RM19b to subsidise pirate IPPs, but it has no money to pay for 116m to pay for sugar, or 600m for fisherman...

RAKYAT said...

I do not understand the flwg:
1)Why the water operating companies can incur such a huge debt?
2)Is not the privatisation scheme to ensure better efficiency and hence profitability?
3)Why must the federal govt use our money to bail out these companies?
Water supply is the social responsibility of the govt and the way the BN govt is doing it,it has totally failed the people.

najib manaukau said...

The government claims to have no money for all the subsidies, which can easily be understood As one of the ministers from Umno has righty claimed that at the rate the government is borrowing and subsidizing it will go bankrupt in a few years.

He failed to mention at the rate his fellow members from Umno are helping themselves to the nation's wealth. The country will go bankrupt or better still it would have gone bankrupt years ago if not for the black gold from the good earth.

He also fails to tell his fellow Umno members that the nation will surely go bankrupt in a matter of few more years. The plundering, stealing and robbing of the nations wealth from Umno members must not only cease but be confiscated from the corrupted ones who are pretending to be supporters of pro Malay policies.These people are really not in the least interested to assist the Malays let alone supporters of pro Malay policies.
Because they are really, at best, mamak, half breeds and the likes of shenanigan Mahathiir appears to be shouting for support of pro Malay policies is only his way to divert the people's attention form the atrocities and corruptions he and his cronies, had committed, would no doubt be attracting attention. Otherwise why would he is transforming his descendants to become Chinese who are already 50% Chinese and the remaining 50% of their blood l are shared by the pariah Indian and Malay. So really they are so much more Chinese than mamak. A spade will always be a spade no matter what you like to call it.
So sad and so bad !

Donplaypuks® said...

This is a crime. The bonds should be redeemed at current market value, if at all.

Tony, please disclose the names of the bondholders the Najib Govt is so keen to protect. It's not classified under the OSA, is it?

Let the Rakyat know the cronies who are being bailed out while the people are being asked to bear higher costs and tighten belts!

we are all of 1 Race, the Human Race

ekompute said...

Hi Tony Pua, you are one hellavu guy! I really salute you on your personal sacrifice and contributions to Malaysian society. But looking at the Malaysian judiciary and the "meteoric" rise of Tun Zaki Azmi to Chief Justice of Malaysia, I really have no confidence in seeking justice in our courts. I may be wrong, though.