MP SPEAKS There is a lack of parity in the process outlined in the MOU between the state and federal government regarding the restructuring of the Selangor water industry.

 

Specifically, the state is forced (irrevocably) to hand over Langat 2 instantaneously, while the federal government will only facilitate the Selangor water restructuring process.

 

It appears that the MOU is governed by two key propositions: (a) The Selangor government commitment is irrevocable vis-a-vis Langat 2. However, (b) the federal government is only commited to facilitate the takeover exercise of the four concessionaires.

 

Federal ministers have declared that the Selangor government’s commitment vis-a vis Langat 2 is legal and thus irrevocable.

 

However, they have been conspicuously silent in exercising the Water Services Industry Act Section 114 in acquiring the four concessionaires. 

 

In short, the level of undertaking is not the same.

 

And in the interim, we are back to the ‘willing seller and willing buyer’ notion which has had not worked in the last couple of years. We will see the outcome of the process on March 10 as the time frame for accepting Selangor's offer expires.

 

Also, the federal government in not wanting to exercise WSIA Section 114 opens up room for arbitration. This has implications for extending the time frame in closing the restructuring exercise and on cost for all sides.

 

Legal tussle

A legal tussle between the state and concessionaires will take time. Concessionaires might resort to international arbitration which could lead to further increase in compensation and legal costs.

 

What was the strategy and logic in arriving at an unequal MOU?

 

An ideal and equitable strategy would have been for the federal government to exercise WSIA Section 114 in order to acquire the concessionaires and hand it over to an SPV of the Selangor government.

 

This has been the demand of the Selangor government ever since negotiations started.

 

Selangor MB Khalid Ibrahim believes that the MOU protects the interests of the state in the restructuring exercise.

 

Thus in the interest of fair play and reciprocity the federal government must persuade the concessionaires to accept the Selangor government’s offer.

 

Otherwise, the concessionaires might misconstrue the federal government’s silence as a tacit opposition to the takeover process.

 

And more importantly, as an equal partner in the agreement, it must openly and urgently declare that it will exercise WSIA Section 114 and not just provide lip-service and facilitation support.

 

Such an endorsement is necessary to instil confidence that the federal government is indeed an honest partner to the restructuring exercise.

 

CHARLES SANTIAGO is MP for Klang, and also coordinator for the Coalition Against Water Privatisation (CAWP).