MP SPEAKS The BN-led federal government continues to bail out water concessionaire Syarikat Bekalan Air Selangor (Syabas) despite ongoing negotiations for takeover by the Selangor government and the battle against persistent budget deficit and rising debt.

Yesterday, Puncak Niaga Holdings Bhd announced that the federal government has extended a further RM151 million in soft loans to its subsidiary Syabas, purportedly to replace old and critical pipes in Selangor, Kuala Lumpur and Putrajaya,and to reduce non-revenue water losses in Selangor, which is among the highest nationwide.    

NONESyabas is given a three-year grace period to commence repayment of the loans and will be charged a subsidised interest rate of only 3 percent. This comes just eight months after a RM120 million soft loan was extended to the company to carry out the same works.

The federal government had given a helping hand to Syabas with a RM320.8 million zero-interest soft loan and RM110 million credit facility in December 2009 and October 2011 respectively.  

To top it off, the federal government took over the outstanding debts of Syabas amounting to RM2.9 billion which the company was unable to repay in 2011, effectively bailing out the cash constricted concessionaire.  

These means that Syabas has benefitted from a total of RM3.6 billion of taxpayers’ money in the form of grants and loans to save the company from collapse since December 2009.

NONEAll this begs the question as to why the federal government has extended billions of ringgit in credit facilities to Syabas despite the latter's obvious failure to provide quality water services as demanded in the Water Concession Agreement signed in 2004.  

It should be emphasised that, under the Agreement, there is absolutely no obligation by the federal and state government to provide financial grants or loans for Syabas to upgrade water infrastructure to fulfil its obligations to provide quality water services.

This means that the RM3.6 billion extended to Syabas is done entirely out of the kindness of the federal government to save a private concessionaire.

Financial desperation

The latest RM151 million worth of loans is also a sign of Syabas' financial desperation as negotiations for its takeover are underway between the federal and Selangor governments.

For a loan to be extended while this is in progress will surely strengthen Syabas’ bargaining power to press for a higher takeover price from the state and delay any deal from happening soon.  

Any sensible government would have taken the opportunity to pressure Syabas to ‘settle’ the impasse before granting any financial favours.

What is worse is that the federal government, despite being desperate for cash due to the double debt and deficit crisis, continues to use taxpayers' monies wantonly to rescue BN's crony companies.  

azlanBy right, if Syabas fails to deliver its obligations to upgrade and maintain water pipes to provide quality water services as agreed, the federal government should sue the company for compensation or terminate the Agreement on the basis of default.  

While ordinary Malaysians are told that subsidies need to be cut and more taxes needs to be collected, crony companies continues to enjoy the implicit government guarantees from financial distress.  

It is rubbing salt into the rakyat's wounds when Puncak Niaga - which can afford to pay its chairperson Rozali Ismail a whopping RM33 million in fees and bonus for 2013 - begs the federal government for RM151 million for Syabas to carry out its obligations.

TONY PUA is the DAP’s member of parliament for Petaling Jaya Utara.