PM: Contract stays with Syabas


  • Business
  • Wednesday, 12 May 2004

BY SIDEK KAMISO AND SA'ODAH ELIAS IN PUTRAJAYA

THE Selangor water privatisation contract awarded to Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) last year stays, Prime Minister Datuk Seri Abdullah Ahmad Badawi indicated yesterday. 

The Cabinet, which meets today, is expected to endorse the award. 

“If the contract had been awarded, of course there won't be any changes,” Prime Minister Datuk Seri Abdullah Ahmad Badawi said when asked about a report in the Asian Wall Street Journal (AWSJ) yesterday that the Government would call for a fresh tender for the project. 

Abdullah, who had earlier met representatives of non-governmental organisations at his office here, was asked to comment on the report, quoting sources, which also indicated that French-based Veolia Environment SA had submitted a proposal together with a local partner.  

Veolia local unit Veolia Water (SEA) Sdn Bhd owns 45% of CGE Utilities Sdn Bhd. 

Puncak Niaga Holdings Bhd and the Selangor Government are the two shareholders in Syabas with 70% and 30% stake respectively. The Federal Government holds a golden share, giving it the final say in the running of the company. 

The AWSJ news report sent Puncak Niaga shares, quoted on Bursa Malaysia, to a low of RM3.02 in the morning session. The counter subsequently recovered to close 10 sen lower at RM3.26. 

Syabas was awarded the concession last year to take over the water supply operation in the state from Perbadanan Urus Air Selangor Bhd (Puas) under a deal that would see the Federal Government extending a RM2.9bil loan to the Selangor Government and Syabas.  

The loan would be available to the State Government to clear its outstanding debt with private water operators in the state, as well as to enable Syabas to modernise the state's water supply infrastructure. 

Syabas had been expected to sign the agreement until Energy, Water and Communications Minister Datuk Seri Lim Keng Yaik called for a fresh study before the Government gave its go-ahead for the project. 

A source close to Puncak Niaga said the company was pinning its hopes on the Cabinet meeting today deciding in its favour. Until press time, Puncak Niaga officials were unavailable for comment. 

Analysts said the current uncertainties surrounding the water privatisation plan would not be good for Puncak Niaga and the water industry, and they had advised their clients to avoid stocks related to the privatisation plan until the issue was settled. 

“We have downgraded Puncak Niaga to 'avoid' until we have a clear direction on the privatisation deal,” said Mayban Securities Research in its daily morning report yesterday. 

Analysts said any further delay in the privatisation plan would be detrimental to the water players and the industry. 

Puas owes Puncak Niaga and three other water operators in the state – Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash), Konsortium Abass Sdn Bhd and Taliworks Corp Bhd – about RM2bil. The debt settlement is crucial to the financial viability of future water projects in the state. 

Analysts said the water operators rely on a speedy conclusion of the water deal to help cash flow. The State Government owns Splash –which had issued Islamic bonds totalling RM1.8bil – some RM460mil in unpaid water bills. “There are so many parameters to consider in the project, and the current uncertainties don't help,” said OSK Securities' industry analyst.  

 Stock Watch On PUNCAK

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