Pengurusan Aset Air Bhd (PAAB) has submitted a proposal to take over the assets of water concessionaires in Selangor to the Energy, Green Technology and Water Ministry. And it is understood that the Ministry is poring through the fine details of proposal before the offer can be made to the water players. The target date of March 2010 has been for the restructuring process to be completed.
“The restructuring hinges on resolving a few fundamental issues which are being ironed out now. Once resolved, the restructuring is probably 50% done. So, the target is (still) well on track,” said an industry source.
In mid-December 2009, PAAB chief executive officer Ahmad Faizal Abdul Rahman had told StarBiz that an offer would be submitted to the water concessionaires in the state by the end of last year.
To date, however, the water players have yet to receive any offers.
“Again, there seems to be a delay in the asset-sale exercise. We were hoping there would be a resolution sooner than later,” said an industry analyst.
Construction companies Gamuda Bhd and Kumpulan Perangsang Bhd (KPS) and water firm Puncak Niaga Holdings Bhd currently own the state’s water assets.
More recently, Puncak Niaga Holdings Bhd executive chairman Tan Sri Rozali Ismail broke his long-held silence on the water revamp plan when he urged the Government to hasten efforts to complete the sector’s restructuring in Selangor, Kuala Lumpur and Putrajaya so that the old-pipes replacement project, which has been frozen pending the revamp exercise, could be carried out.
Apparently, last April, the Government had directed Syabas, which is 70% owned by Puncak Niaga, to freeze its RM2.6bil pipe replacement and communication project until the revamp of the water sector in the three areas is completed.
Early this month, Kenanga Research shot out a note saying that it expected PAAB to come up with a new offer in the near term as the due diligence for the acquisition of water assets should be completed by now.
“As Syabas is in cash constraint, we feel that the negotiation will be solved immediately,” it said.
A month ago, it was announced that Syabas had secured a RM320.88mil loan from the Federal Government, essentially to enable Syabas to repay water purchased from three water treatment operators, namely its sister company Puncak Niaga (M) Sdn Bhd, Konsortium Abass Sdn Bhd and Splash.
“The group would have no choice but to continue gearing up unless it receives the 37% tariff hike due under the concession agreement or alternatively, the water asset consolidation talks materialises,” said TA Research.
Prior to December last year, the Selangor government was leading the talks on taking over the assets from the water players.
After months of negotiations and revised offers, the state government announced that it was unable to proceed with the offer due to the disagreement and so, the ball was back in the court of Minister of Finance Inc’s wholly owned PAAB to lead the talks.
So, what do you do now untul we reach the end of March?
If you are a stock picker, just have a cursory glance at the prices of KPS, KHSB,JAKS,Gamuda, Puncak Niaga from now on. If all of them start to move quite vigorously, then you would know that the end of near for the Selangor water woes.
Until then just live your life...........
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