The Selangor Pakatan government opposed any hike to the prevailing gazetted tariff by Syarikat Bekalan Air Selangor (Syabas) as the company failed to fulfill the concession agreement, including reducing the non-revenue water at the agreed rate.

This was stated by former state secretary Ramli Mahmud in his affidavit-in-reply over the RM471 million suit filed by Syabas against the Selangor government.

Describing the suit filed by Syabas last November as improper as it was based on an increased tariff which was not agreed upon, the Selangor government claimed the suit was filed in bad faith and is an abuse of the court process.

NONE “Syabas knew the water industry is undergoing a restructuring based on the Water Services Industry Act 2006 and the National Water Services Commission Act 2006 (Span),” Ramli ( left ) said in his affidavit.

“Before the concession agreement was signed, the Selangor government had many times urged that it be given a golden share in Syabas. However, the federal government was not agreeable and on the other hand it (the federal government) agreed to pay any compensation claim which is raised.”

He also said Syabas should claim the amount from the federal government, since it was agreed upon before the signing of the 2004 concession agreement that the federal government had agreed to pay compensation.

Among the items that Selangor has alleged Syabas failed to comply with under Clause 18 of the 2004 concession agreement are the non-disclosure of its review document to Selangor as required, that the non-revenue water was still in excess of 30 percent in 2008, and that no appointment of an independent auditor was made to oversee Syabas' accounts.

Furthermore, the Selangor government received negative feedback on Syabas, which was yet to give the state a copy of its certified review documents and that there was no joint-certificate to verify the accuracy of the details the water utility company had provided.

Ramli, in the 43-page affidavit, also stated Syabas should not be claiming from Selangor but from the federal government as it (the federal government) had in the past paid RM125 million in the form of grants for work on non-revenue water to improve the quality of water supply.

The former state secretary was responding in the suit filed by Syabas on Nov 10, 2010, against the Selangor government for the non-payment of the new agreed tariff rate from RM1.39 per cubic metre to RM1.89 per cubic metre for the third operating period  between Jan 1, 2009, and Dec 31, 2011.

Syabas in its originating summons claimed that from Jan 1 to Dec 31, 2009, there was an amount of RM471.64 million owed, which was compensation owed to the company.

The water utility company sent a letter dated Sept 23, 2010, requesting the Selangor government to pay up, but the defendant had failed or refused or neglected to pay.

The case has been fixed to be heard before Kuala Lumpur High Court judge Justice Anantham Kasinater on Feb 11.

Syabas concession agreement

The Selangor Pakatan government has been at odds with Syabas and has offered RM9 billion to purchase the four water concessionaires, including Syabas.

Under the concession agreement, Syabas is to complete programme works covering 98 percent of the population before the agreement ends on Dec 31, 2034.

syabas logo Syabas is responsible for ensuring the expansion and improvement in the water distrubution, asset management and replacement of old pipes.

Syabas is also required to improve on its performance and absorb capital expenses of RM10.7 billion, pay water treatment operators for the purchase of treated water and dispose of all debts uo to June 30, 2004, which is worth RM2.37 billion.

The company is also required to absorb operational costs of RM100.4 million, reduce non-revenue water from 42.78 percent as at Jan 1, 2005, to 15 percent at the end of the concession agreement and control the distribution costs from 20 sen in 2005 and up to 42 sen until the end of the concession agreement.

Ramli also stated in his affidavit that although Syabas had to bear the capital expenses for the improvement and development of the water distribution system, it had failed to monitor and ensure it abided by the concession agreement.

“The Selangor government, which holds a 30 percent stake in Syabas, assures the people of Selangor that the state will ensure the interests of the consumers in getting the best service for its water supply.

“Selangor owns a azlan 30 percent stake in Syabas through Kumpulan Darul Ehsan Bhd and the Selangor Perangsang group, where both possess a 15 percent stake.”

Ramli stated that some time in May 2008, Span had - at a meeting with Syabas to look into a proposal to hike the tariff - required the water concessionaire to appoint external auditors.

He claimed that although Syabas “appointed” an external auditor to evaluate its performance, the state feels it is not independent on its own for the purpose of a proper evaluation.

Ramli also alleged that Syabas had owed the Selangor government RM29.2 million although the company had paid the charges for the use of the land and the annual charge.

His affidavit, dated Dec 14, was not drawn up by the Selangor legal advisor’s office but by the state-appointed lawyer Fahda Nur.

Normally, in cases involving the state government, the state legal advisor would draw up such replies. Since Selangor is governed by Pakatan Rakyat, it had in the past engaged its own lawyers to represent it.

They included Malik Imtiaz Sarwar for the Teoh Beng Hock case and Fahda again in the Selangor government’s directive against the Malaysian Anti-Corruption Commission barring its civil servants from having their statements recorded by MACC after office hours.

Ramli also attacked Syabas, saying that the company has received a lot of benefits and made a lot of profit as a concession holder, and it would be improper to impose the tariff hike.