Puncak Niaga worries about further delays in water deal

  • Business
  • Friday, 17 Jul 2015

PETALING JAYA: The agreement to restructure the water services industry in Selangor has been extended by two more months since the deal was first signed in November last year.

But Puncak Niaga Holdings Bhd (PNHB) executive chairman Tan Sri Rozali Ismail has expressed fears that the conditions to firm up the deal between the Selangor and federal governments may take more than the two months that both parties have sought.

Rozali has questioned why it required two more months to fulfil conditions precedent (CP) that would mark the completion of the water-restructuring exercise in Selangor.

He said the water supply issue in the state was a matter of urgency.

“The CP could be fulfilled in seven days if it is not complicated. I am surprised that it would take that long as all the main matters such as land have been resolved. I am worried that it may drag further.

“Both governments should realise the urgency of the inadequate water supply for consumers and the economy of the most industrious areas (Kuala Lumpur and Selangor) in the country. I am concerned for the public and the longer we dwell on this matter, the more it could adversely affect foreign investors’ perception,” he told StarBiz.

Last Friday, the federal and Selangor governments signed a supplementary agreement on the restructuring of the water services industry that covers the supply to the state, Kuala Lumpur and Putrajaya. In the supplementary agreement, both governments have 60 days to fulfill the CPs in the master agreement that was first signed on Nov 11, 2014.

After the CP has been fulfilled, the master agreement and sale and purchase of PNHB’s water assets by Pengurusan Air Selangor Sdn Bhd for RM1.56bil would be enforced.

The water assets under PNHB are Puncak Niaga (M) Sdn Bhd, which is a raw water treatment operator, and Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) that holds the rights to distribute water in Selangor, Kuala Lumpur and Putrajaya.

Only then can the restructuring of the water supply industry in Selangor, that effectively is for the state to take back the water assets, be completed. And at the same time, PNHB would realise the gains from the water assets and utilise the funds for its other ventures that include its oil and gas business.

The master agreement was signed last year when Tan Sri Khalid Ibrahim was mentri besar of Selangor. Now, Azmin Ali has taken over from Khalid. Both governments had some disagreements on land matters, causing it to be extended several times. The federal government requires the necessary approvals for the land to build the Langat 2 water treatment plant.

Last month, PNHB agreed to a sixth extension until July 13, 2015 to fulfil the CPs in the agreement dated Nov 11, 2014.

“The raw water supply and treatment plants are now just enough to cater to current needs, with the water reserve capacity critically low at 1%.

“A drought or pollution to the rivers would result in a major water disruption since many of the treatment plants are already operating beyond their capacities,” said Rozali.

Puncak Niaga currently operates 29 water-treatment plants that supply water to Syabas, which then distributes the water.

Ideally, the water reserve capacity should be kept at around 20% at any time. The development of Langat 2 will increase the water reserve capacity to the ideal 20% and would cater to the Klang Valley’s future demand for the next 30 years.

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