Another soft loan for Syabas despite bad water services? asks DAP

A DAP lawmaker has taken Putrajaya to task for its "persistent" handouts to Syarikat Bekalan Air Selangor (Syabas) despite the company's failure to provide quality water services.

Petaling Jaya Utara Member of Parliament Tony Pua (pic) said this in response to an announcement by Puncak Niaga Holdings Bhd that Putrajaya had approved a RM151 soft loan for its 70%-owned subsidiary - Syabas.

In a filing to Bursa Malaysia today, Puncak Niaga said that the first phase of a RM75 million loan would be used to finance works related to the water supply mitigation programme, involving old pipes and critical pipes replacement in Selangor, Kuala Lumpur and Putrajaya.

Another RM76 million from the loan will finance the second phase of the programme which involves reducing non-revenue water loss.
Interest for the loan was at three per cent per year while default interest was at five per cent per annum.

"The federal government continues to bailout Syabas despite on-going negotiations for takeover by the Selangor state government and the battle against persistent budget deficit and rising debt," Pua said, noting that Syabas was also given a three-year grace period before it was to pay the loans.

"The above amount comes just 8 months after a RM120 million soft loan was extended to the company in February to carry out the same works," he disclosed.

The DAP national publicity secretary pointed out that previously, Putrajaya had also extended a RM320.8 million zero-interest soft loan in 2009 and another RM110 million credit facility two years later.

That same year, the government came to the rescue of the water concessionaire and paid off the company's outstanding debt, amounting to RM2.9 billion, which Syabas itself was unable to.

"This means that Syabas has benefited from a total of RM3.6 billion of tax-payer's money in the form of grants and loans to save the company from collapse since December 2009.

"The question that needs to be asked is why is the government so persistent in extending these annual credit facilities, worth millions, to Syabas despite the latter's obvious failure to provide quality water services to the public as demanded in the water concession agreement signed in 2004?" asked Pua.

Under the Water Concession Agreement, Pua added, the federal and state government had no obligations to provide financial grants or loans to Syabas for it to carry out upgrading works, as part of its obligation.

"This means that the RM3.6 billion extended to Syabas is done entirely out of the kindness of the BN Government to save a private concessionaire," he said.

Pua claimed that the latest loans from Putrajaya showed Syabas's "financial desperation" as it was discussing with the Selangor state government and Putrajaya for a possible takeover.

"For this loan to be extended while extensive negotiations are taking place, it will surely strengthen the bargaining power of Syabas to press for a higher takeover price from the state and delay any deal from happening soon," he charged.

Pua pointed out Putrajaya being forced to cut subsidies and collect more taxes, it was still willing to use public funds to rescue "crony companies".

"Any sensible government would have taken the opportunity to pressure Syabas to 'settle' the impasse before granting any financial favours.

"By right, if Syabas fails to perform its obligations to upgrade and maintain its water pipes to provide quality water services as per the agreement, the Federal Government should sue the company for compensation or terminate the agreement for default," he insisted.

"It is rubbing salt to the rakyat's wounds when Puncak Niaga can afford to pay its chairman Tan Sri Rozali Ismail a whopping RM33 million in fees and bonus for 2013 but needs to beg for RM151 million from the government to carry out its obligations under the Water Concession Agreement."