Putting Water In The Hands Of The Public


SHAH ALAM, 20 Mar: A Special Purpose Vehicle (SPV) will be created to manage and operate the Selangor water asset which will be jointly owned by the state and its people, when the Chief Minister, Tan Sri Abdul Khalid Ibrahim’s water industry restructuring plan is successfully implemented.

Khalid stated that if the plan is successful, he wants to provide and equity in SPV for the five million people of Selangor and to be listed on day.

The real asset will be held by the Water Asset Management Bhd (PAAB) when it privatises the four water concessionaires – Puncak Niaga Sdn Bhd (PNSB), Syarikat Bekalan Air Selangor Bhd (Syabas), Konsortium ABASS Sdn Bhd and Syarikat Pengeluaran Air Selangor Holdings Sdn Bhd (SPLASH).

The consolidated assets would then be leased back to the SPV under the state-owned company, Kumpulan Darul Ehsan Bhd (KDEB).

“One f the weaknesses of the privatisation monopoly is that it does not protect the interests of the people. If we succeed in this RM9.65 billion action, we will ask the people of Selangor to buy it,” said Khalid.

“There are five million people in Selangor. If everybody has the same basis, the cost would be about RM2,000 per person. We may assign, say, 2,000 share for each citizen of Selangor.

“Then, after we successfully manage these assets, we will use the dividends to offset the earlier cost of RM2,000.

“Eventually, everyone will have a share in the SPV. They will be the owners and the customers. After that, when we profit, we can float it as a public company with many shareholders,” Khalid explained.

The values used in his explanation is simple and hypothetical in nature, but it is similar to the model used by the former chief executive officer of Permodalan Nasional Bhd (PNB), almost 30 years ago for the fund management company.

In 1981, Khalid attempted to launch a unit trust for poor Bumiputeras, but he found that many could not afford it, so he convinced the Treasury to issue a loan of RM500 million which enabled Bumiputeras to subscribe shares. The cost was deducted from the dividend and ultimately, each person could own a unit trust.

Under the management of KDEB, Khalid is confident that the state’s water assets can be managed for the benefit of its shareholders.

“The water asset is currently operating with 33% of non-revenue water (NRW). Can you imagine if we cut it down to 20%? In fact, even with the current inefficient management, there is still a margin (profit).

“What would happen if you cut the (NRW) rate,” Khalid said.

The rate of non-revenue water (NRW) has become the jarring point between the Selangor State Government and Syabas when Syabas claimed that it could not achieve the target of 19.98% sue to lack of funding from the state.

However, Khalid stressed that from the beginning, Syabas agreed to meet the 19.98% target of non-revenue water with a budget of RM784.1 million.

However, since 2005, Syabas has spent more than RM995.7 million by was only able to reduce the NRW rate to 32.31% from 37.65%.

“In addition, audit reports show that Syabas does not practise good administration because they did not make a proper tender contract offer. If we can improve this tender system, we can reduce costs.”

About RM700 million worth of contracts have been submitted by Syabas, where over 80% of them were carried out through tender negotiations, Khalid stressed, while stating that the state government is also audited by the National Audit Department.

“If we can reduce costs and increase revenue, we can certainly make a profit.

“The question is: will this profit be enjoyed by a handful of businessmen, or should it be returned to the people who uses this facility.

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