Selangor will seek international arbitration if water concessionaires reject the state’s offer to buy back the rights to manage and supply water. Menteri Besar Khalid Ibrahim said the state’s latest offer to the four companies is being prepared; “the key difference is that we hope to seek federal co-operation on international arbitration if the companies do not accept the offer”.
He told the weekly state-supported newspaper Selangor Times that the state’s offer would be in line with national policy and in the spirit of the Water Services Industry Act recently passed by Parliament to consolidate the ill-managed and fragmented water services industry.
Puncak Niaga Sdn Bhd, Konsortium Abass Sdn Bhd and Syarikat Pengeluaran Air Selangor Sdn Bhd (Splash) have the rights to treat water; while Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) distributes water.
The companies have rejected four offers to take over their concessions, including a RM10.8 billion bid in March from Gamuda, the main shareholder in Splash.
To break the deadlock, the state sent to the federal government last week its proposal for international arbitration. Khalid said independent arbitration was the fairest method and would ensure the integrity of the restructuring of water supply and distribution. exercise.
The state and federal governments are in dispute over who should control the supply and distribution of water in Selangor.
Khalid’s government believes the state can maintain current water tariffs and improve efficiency while channelling profits back to the state. In the 1980s. Selangor Water Works earned profits of RM50-80 million a year for the state.
The federal government wants Syabas to continue managing water supply despite Selangor’s complaints of numerous contract breaches by the company and its poor track record.
The previous federal government had given the go-ahead in January 2008 for Selangor’s investment arm Kumpulan Darul Ehsan, then under control of the previous Barisan Nasional government, to consolidate the water industry.
When Pakatan Rakyat took power in March that year, Khalid Ibrahim’s government decided on restructuring the water industry and offered the concessionaires RM5.7 billion in return for the concessions. The companies rejected the offer as being insufficient to cover their combined debts of RM6.4 billion.
The state revised the offer to RM9.3 billion four months later, which Splash and Abass accepted.
In March this year, the Federal Government made its own offer of RM10.3 billion; it was rejected by PNSB and Syabas.