The federal government’s decision to bail out privatised water companies over debts worth RM6.5 billion has ruined all chances of a Selangor government takeover of the state-level sector.

DAP’s Petaling Jaya Utara MP Tony Pua said the state government’s hopes of restructuring the Selangor water industry to ensure lower tariffs and halt further hikes cannot materialise now.

In a stateme NONE nt today, Pua said the federal government’s move has taken away the state’s negotiating leverage.

“The failure of these companies to service their debts ... would have necessitated these companies to ... negotiate the terms of restructuring with the Selangor government or other parties which had made offers to acquire the businesses and assets,” he explained.

Pua, who sits on the Selangor Water Review Committee, noted that the likely outcome of the bailout is that the federal government will take over assets in lieu of payment, allowing the companies the ability to still profit from supplying water without being burdened by debt.

“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 restored to ensure quality water (is) provided at the lowest possible price.

“The bailout debunks all earlier claims that the BN federal government is acting in the interests of the rakyat, and proves that it is only interested in protecting the interests of political cronies.”

Pua urged Minister of Energy, Water and Green Technologies Peter Chin to provide clarification before the deal is finalised.

“He must fully disclose at the same time the means and terms of repayment to the government by these concessionaires with the (takeover of) these debts,” added Pua.

Default risk eliminated

It was recently reported that the federal government is to bail out four players - Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Puncak Niaga Sdn Bhd (PNSB), Syarikat Pengeluaran Air Sungai Selangor Sdn Bhd (Splash) and Konsortium Abass.

water bill 110608 The companies were at risk of defaulting in their payments after failing to make their instalments earlier this year, with PNSB and its subsidiary Syabas holding debts amounting to more than RM4.2 billion.

Syabas has been at loggerheads with the state, which refused to allow a tariff hike, arguing that Syabas had not fulfilled the agreement signed by the previous BN-led state administration.

Specifically, the state government, now under Pakatan Rakyat, had argued that Syabas has failed to reduce non-revenue water.

The Selangor government had recently made a third offer to acquire the water companies and their assets, as well as take over their debt obligations, for RM6.3 billion, in order to halt tariff hikes.

Gamuda Bhd, through its subsidiary Splash, had also made an offer to acquire the same for RM10.8 billion.