Prospects for buying back Selangor's water assets look bright as the cabinet has agreed to invoke a law to force the private concessionaires to surrender the assets back to the state, Menteri Besar Abdul Khalid Ibrahim said today.

Khalid said Energy, Green Technology and Water Minister Maximus Ongkili confirmed in a letter last Friday that the government would invoke Section 114 of the Water Services Industry Act (WSIA) (2006).

Three of the four state water concessionaires have repeatedly turned down Khalid’s offer of RM9.65 billion to buy back water assets. But under the WSIA, they have no choice but to accept.

“The state government is confident that cooperation with the federal government will ensure that water industry restructuring will be a success.

“At the same time, we hope the people will be patient and save water for now while anticipating better water services to come,” Khalid said in a press statement.

In exchange for invoking the WSIA, the federal government has asked that Selangor expedites permission for the stalled Langat 2 water treatment plant and other mitigation projects.

Water treatment operations are undertaken by concessionaires Puncak Niaga Sdn Bhd, Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) and Konsortium Abass Sdn Bhd.

These three companies sell the treated water to Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) to distribute.

Puncak Niaga's main shareholder is former Umno treasurer Rozali Ismail and Puncak also owns major stakes in Syabas. Splash is partly owned by Gamuda Bhd.

Khalid has tried unsuccessfully to buy back the state water assets since 2009, starting with bids at RM5.7 billion.

Only Abass, which is almost solely Selangor government-owned, has agreed to a takeover offer when Khalid made what was to be his final bid at RM9.65 billion last month.

The other companies refused to sell back their assets to the state, claiming they have lost much money selling water at low tariff rates for years.

Under the WSIA, the federal government has a "golden share" in Syabas and can legally force the company to decide in favour of the takeover.

Khalid appeared to have gained the upperhand through a memorandum of understanding (MOU) on water, signed with minister Ongkili on Feb 26. The details were initially kept secret.

A more concrete draft to follow-up the water agreement has been prepared and includes the invocation of WSIA, Khalid said.

"The state government will carefully study the draft agreement before signing it, for safeguarding the people's and state's interests is our priority," he added.