Selangor has right to countersue Syabas, says Khalid

SHAH ALAM, Jan 12 – Tan Sri Khalid Ibrahim said today that Selangor has the right to countersue Syabas if the water concessionaire did not fulfil its responsibilities.

Syabas has sued Selangor for RM472 million after the state Pakatan Rakyat (PR) government prevented it from increasing water tariffs in 2009.

“If Syabas wants to sue us, we have the right to countersue Syabas,” Khalid told reporters today.

“We have the right to sue Syabas if we feel Syabas has not fulfilled its role,” he added.

Selangor’s water players — Syabas, Puncak Niaga Sdn Bhd (PNSB), Syarikat Pengeluaran Air Sungai Selangor Sdn Bhd (Splash) and Konsortium ABASS — are at risk of debt payment default as water bonds approach their maturity dates.

The debt service problem started when Syabas was barred from implementing a 37 per cent tariff hike agreed upon in January 2009 after the Selangor government claimed the sole water distributor had not done enough to reduce leakages which cost the state millions.

This, in turn, led to payment problems between Syabas and water treatment concessionaires PNSB, Splash and Konsortium ABASS, who supply it with treated water.

Today, however, Khalid dismissed the notion that Syabas’s suit would affect Selangor’s attempt to resolve the two-year water consolidation impasse.

“As far as we’re concerned, the best route is for us to restructure the water industry, which we have done,” said Khalid.

Khalid said on Thursday that Selangor has made a new offer of RM9 billion for the assets of all four water concessionaires in the state before selling all assets to the federal government.

The Malaysian Insider had reported last month that Selangor will offer about RM5.7 billion to acquire the remaining state water assets, while leaving its present owners to pay off their own liabilities.

Selangor, which already owns 80 per cent of the state’s water supply assets, is preparing to take over the remaining assets after Putrajaya said it did not object to direct negotiations between the state government and concessionaires.

It intends to retain management of the water assets, which also cover the federal territories of Kuala Lumpur and Putrajaya.

A project to obtain water from Pahang has also been delayed due to the issue.

The state government has made two previous offers for the water assets.

The first offer, RM5.7 billion for assets and equity, was turned down by all four players, while the second RM9.4 billion offer — this time including liabilities — was rejected by Syabas and sister company PNSB.

The water consolidation impasse began soon after the loose federal opposition pact unexpectedly took control of Selangor, Malaysia’s richest state, in the last general election.

Since then, privatisation plans for the water industry have been put in deep freeze as federal and state governments engage in what industry watchers have called “excessive politicking”.

PR wants to control the state’s water assets so it can fulfil its promise to keep water cheap for Selangor residents by controlling tariffs. - Malaysian Insider