Selangor unlikely to get another extension in takeover bid

  • Business
  • Thursday, 12 Apr 2018

What an opening: Devamany (fifth from left), Zaini (fourth from left), UBM Malaysia co-chairman Tan Sri Mohd Azumi Mohamed (third from right) and other VIPs pouring water into a large tank at the official opening of AsiaWater 2018 at KLCC.

KUALA LUMPUR: After three delays, the Selangor government is unlikely to get another extension in its bid to take over water concession company Syarikat Pengeluar Air Selangor Sdn Bhd (Splash).

Citing a recent remark by Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili, the secretary-general of the ministry, Datuk Seri Dr Zaini Ujang, reiterated the importance of the Selangor state government in resolving the outstanding issue in the takeover offer of Splash by July 4 this year.

“The Selangor government has to name the price for the Splash takeover, and complete the takeover process first,” Zaini said.

“Then only the water migration process can happen to prevent the water crisis in the state from worsening,” he added.

Speaking to reporters after the opening ceremony of AsiaWater 2018, Zaini said there could be negative implications on the local bond and financial markets if the Selangor state government failed to resolve the long-standing impasse in the takeover bid of Splash.

“At stake here is the RM6bil outstanding bonds that are due,” he said.

Ongkili last week said the Selangor state government must state an offer price to buy Splash, as stipulated in the master agreement to end the state’s water saga.

He said the federal government would be left with only two options after the July 4, 2018, deadline. And that would be either invoking Section 114 of the Water Services Industry Act 2006 for a forced takeover or just cancelling the entire master agreement.

Ongkili said the state government should not delay the process, as to date, eight states have completed restructuring their water industry using similar methods to Selangor.

The Selangor government owns 30% of Splash through Kumpulan Perangsang Selangor. Other shareholders include construction giant Gamuda Bhd (40%) and The Sweetwater Alliance Sdn Bhd (40%), a company controlled by businessman Tan Sri Wan Azmi Wan Hamzah.

Splash is the last piece of the puzzle in Selangor’s water-consolidation exercise, after the state completed its takeover of three other water concession companies, namely, Syarikat Bekalan Air Selangor Sdn Bhd, Puncak Niaga Holdings Bhd and Konsortium Abbas Sdn Bhd in 2015.

The deal with Splash fell through then after it turned down the state offer of RM250.6mil, citing the offer price as being too low.

Meanwhile, according to acting deputy minister Datuk Seri S.K. Devamany, states that have fully migrated to the asset-light regime now have better reserve margins, ranging from around 16% to 34% compared to the national average of 13.2%.

“Two states had close to zero water treatment plant design capacity as against production. In terms of distribution capacity, efforts to have better network connectivity will be pursued by the regulator. The better the connectivity for distribution networks, the lower the level of reserve margin needed.

“Well-connected distribution networks enable water to be supplied from other treatment plants, should there be any breakdowns or disruptions due to maintenance. However, these requirements will form the next focus areas by the government and the regulator in the future,” he said in a prepared speech for the official opening of AsiaWater 2018.

Now in its 10th edition, the annual event came with the central theme of “Partnership for Growth and a Sustainable Water Future”. The three-day event attracted participants from about 47 countries and at least 1,000 exhibiting companies.

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