Puncak Niaga Holdings Bhd is on track to finalising its water privatisation agreement with the Federal Government by May, a company spokesman told StarBiz yesterday.
The company had not received any indication from the Government that the deal, announced last year, would be reviewed or changed, he added.
“Whatever was reported yesterday was news to us, we are still keeping to our timetable when it comes to signing the agreement.”
Energy, Water and Communications Minister Datuk Seri Dr Lim Keng Yaik had said the ministry would submit to the Cabinet a proposal to put on hold water supply privatisation in some states until a regulatory body to monitor water management was set up.
He also announced a move by the ministry to create a national water commission to regulate and manage the country's water resources.
Market observers said the ministry's plan could jeopardise some of the deals on water privatisation announced last year, including the proposed move by Puncak Niaga to take over 70% stake in Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), the company that would be responsible for supplying water to Selangor, Kuala Lumpur and Putrajaya.
Under the proposed deal the Selangor Government would hold 30% stake in Syabas, and the Federal Government a golden share.
Other privatisation projects being considered involved Negeri Sembilan, Pahang and Sabah.
Sarawak Concrete Industries Bhd is to take over NS Water Sdn Bhd, which has been awarded the concession for water privatisation in Negeri Sembilan.
Conclusion of the Syabas deal would see the Federal Government providing financial assistance totalling RM2.9bil to Syabas for working capital as well as to pay the state government's long standing bill due to Puncak Niaga.
Currently, Puncak Niaga supplies nearly 70% of the raw water needs of the state government's unit, Perbadanan Urus Air Selangor Bhd (Puas), which channels water to the public.
Water resources, previously under the Housing and Local Government Ministry, had been transferred to the ministry newly created following the recent general election.
Analysts believe the current deal between Puncak Niaga and the Federal Government is not likely to be affected as it is in at an advanced stage.
“Any delay in signing the deal with Puncak Niaga will set back the plan to modernise water supply in Selangor,” said an analyst with a local brokerage.
“A delay would also likely be negative for Puncak Niaga; and eventually consumers who have to put up with poor water quality,” said the analyst.
The deal will resolve several issues, including the replacement of old pipes, the major cause of the high percentage of non-revenue water.
OSK Research noted in its morning brief that the proposal to set up a national water commission, and the related study, would be time consuming.
There is urgent need for the ministry to resolve the Puncak Niaga deal given that trade receivables owed by the state government to the water treatment operator would exceed RM2bil by next month.
Market observers said water resources could be managed professionally even if they were privatised, as shown in Penang, which currently enjoyed the cheapest water rate in the country.
The state water body had been privatised and listed under PBA Holdings Bhd.
Did you find this article insightful?