Government unhappy over one-sided contracts, says Najib

  • Nation
  • Tuesday, 27 Jul 2004


KUALA LUMPUR: The Government wants to renegotiate some of the privatisation projects to ensure that it does not continue to be shortchanged and the people unduly burdened. 

The projects include the construction and management of highways and public utilities, said Deputy Prime Minister Datuk Seri Najib Tun Razak. 

“We want to ensure that the terms are fair for the Government and ultimately the people,” he said at an investment seminar, organised by financial services group ECM Libra Bhd and a business weekly, here yesterday. 

Najib stresses on the need for the terms to be fair to the government and ultimately to the people.

Asked during a question-and-answer session, Najib admitted he felt that some of the earlier privatisation deals were too one-sided in favour of the concessionaires. 

He attributed this to the government's inexperience in such matters, pointing out that the concessionaires came to the negotiating table with high-powered legal and merchant banking advisers. 

Najib cited one example of a one-sided deal – with Spanco Sdn Bhd, which has a privatisation contract to lease and maintain government vehicles. 

He said the Cabinet had ordered the deal to be renegotiated, not cancelled. 

Najib said the contracts given out to water concessionaires were also too favourable to them and the Government would be seeking a revision of the terms to make them fairer to it and consumers. 

On a lighter note, he said that this was because the Government wanted to repeat its victory in the recent general election. 

He said that if the water contracts were not renegotiated, the consumers would have to pay much higher water rates and the Government would not be able to win 90% of the parliamentary seats in the next elections. 

Speaking to reporters later, Najib said the Government was determined to implement the open tender process for all its projects. 

“We are quite determined to implement open tenders except for some projects involving the security of the country,” he said. 

He said the Government would also honour projects which had been given letters of award. 

Those like the RM14.5bil double-tracking rail project had been deferred “not because we did not think it was needed, but because we felt it was not needed right now,” he said 

“The Government will continue to prioritise plans based on affordability and cost and the impact of long-term competitiveness and the benefits to society,” he said. 

Najib also said the Government planned to reduce the market capitalisation of government-linked companies (GLCs) in Bursa Malaysia. 

He said the GLCs made up one-third of market capitalisation in Bursa Malaysia. 

“We realised the shortage of liquidity in the stock market. We do not need to hold on to so many shares,” he said. 

He said the Government had allowed GLCs like Telekom and Tenaga to sell down their equities. 

He said the Emplyees Provident Fund would also reduce its holdings in some listed companies. Speaking at the same event later, Energy, Water and Communications Minister Datuk Seri Dr Lim Keng Yaik said some of the rates charged by the public utility operators had been too high and all such projects would be renegotiated. 

“These rates must come down, given the level of subsidies involved in running the operations, he said. 

“We will renegotiate these projects by way of the 'carrot and stick' approach.”  

He added that the renegotiation would affect current water operators and independent power producers (IPP).  

At a press conference, he explained that the “stick” would include tightening current regulations to get the players to lower the rates while offering the “carrot” by way of giving them much bigger projects to manage. Dr Lim also indicated that the Government would follow closely the water sector in Britain, which had successfully managed utilities as regulated assets. 

“There will be no tariff increase as long as I am in this ministry,” he added. 

Dr Lim also said that the Government would finalise the setting up of a National Water Commission by the end of the year. 

Sabah and Sarawak would be allowed to have their own commissions in view of the view of the difficulties to merge all the water authorities in the two states.  

Regarding power projects, he said the Government would negotiate on the current rates charged by the independent power producers in view of the huge government subsidies involved in running the power plants.  

Click for more reports on the conference via StarBiz 

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