PKR director of strategy Rafizi Ramli has claimed that the deal inked between the Selangor and federal governments to take over four water concessionaires in the state may lead to a hike in tariff.

Rafizi said the deal, which involves the federal government acquiring water facilities in Selangor and construction of the Langat 2 water treatment plant, will both be financed by public money.

As a result, Rafizi said the debt burden will force Selangor's new water operators to increase the tariff.

"...The higher the cost of the Langat 2 project, the higher the public debt and the water tariff that the rakyat must foot," he told a press conference at the PKR headquarters in Petaling Jaya this afternoon.

Elaborating on his assertion, Rafizi (left) said the federal government will, through Water Asset Management Company (PAAB), acquire assets from the state government and the four concessionaires.

"The acquisition will be financed through the issuance of bonds guaranteed by the federal government. In other words, the federal government is taking debt to pay the concessionaires," he said.

PAAB will then lease the water assets back to the state government but as it has to deal with debt from the acquisition (through government-guaranteed bonds), the leasing price is also likely to be higher.

"The higher the leasing price, the greater the cost for the (state government's) water operator,” he claimed.

“This means the operator will have no other choice but to increase the tariff in Selangor to overcome the cost of annual lease from PAAB.”

Rafizi expressed concern that the federal government has shortchanged Selangor in the memorandum of understanding that the two parties had signed last week.

This, he said, is because the MOU is non-binding, with the exception of the Langat 2 project favoured by the federal government.

"Article 5(b) of the MOU clearly states that the Selangor government must ensure all approval concerning the Langat 2 water treatment plant, be it by the (state) government or relevant authorities; (this is) binding and irrevocable...," he said.

This provision, Rafizi said, is tantamount to giving full approval for the Langat 2 project.

"This means the Selangor government has let go of its only weapon (or bargaining chip), which is the Langat 2 project, in dealing with the federal government without getting any binding commitment in return," he said.

Rafizi further questioned the validity of the MOU, saying it was signed “without the knowledge of the Selangor exco”.

"According to (CEO of Menteri Besar Incorporated) Faekah Hussin's statatement, the MOU was only known and finalised one hour before it was signed.

"Therefore, surely it did not go through the exco.

 
"Without the exco's approval, the validity of the MOU is questionable," he said.

Selangor shortchanged?

Rafizi based his assessment of the terms of the MOU on a copy that he has obtained.

Thus far, the state government has refused to release a copy to the media, saying it is bound by the Official Secrets Act not to do so.

Rafizi released his copy on his blog today, claiming that he had received it from the Selangor menteri besar’s press secretary, Arfaezah Aziz, and that he has verified its authenticity.

When contacted by Malaysiakini , Arfaezah denied emailing the MOU to Rafizi.

Earlier today, Selangor exco member Elizabeth Wong had said that a copy of the MOU being circulated online is not genuine.

Rafizi insisted that the copy he released today is correct, adding: "If this document is not the real one, then show us the real one.”