This article first appeared in The Edge Financial Daily on July 3, 2018

KUALA LUMPUR: Kumpulan Perangsang Selangor Bhd (KPS) has secured a contract worth RM20 million from Pengurusan Air Selangor Sdn Bhd to replace existing pipeworks in Hulu Langat and Kuala Lumpur.

In a filing with Bursa Malaysia yesterday, KPS said its indirect 60%-owned subsidiary SmartPipe Technology Sdn Bhd accepted the letter of award for the work from Air Selangor on the same day.

The key scope of the work as described in the contract includes supplying and installing mild steel pipes, installing ductile irone pipes and high-density polyethylene pipe fixtures.

The contract works cover 16.3km and will be implemented in seven areas, namely Jalan Cheras–Klang, Hulu Langat Road, Taman Segar, Bangsar Ville, Taman Supreme, Sri Hartamas and Kg Seri Delima.

“The contract is estimated to be completed within 15 months from its commencement date on July 9, 2018, and hence is expected to contribute positively to the Perangsang Selangor group for the financial years ending Dec 31, 2018 and 2019,” KPS said.

Air Selangor reported in January 2018 that it had successfully reduced non-revenue water (NRW) rates in Selangor from 32.6% in 2015 to 30.1% by end-2017, saving 82 million litres of water per day. It aims to reduce the NRW rate further to 28% by end-2020.

KPS shares yesterday closed up five sen or 2.98% at RM1.73, with a market capitalisation of RM918.94 million.

The counter had gained as much as nine sen or 5.4%, following news that the restructuring of the Selangor state water sector would be finalised soon.

The stock opened three sen higher at RM1.71, before surging to hit its intraday peak of RM1.77 within the first 30 minutes of trading.

A total of 1.29 million KPS shares were crossed — compared with the counter’s 200-day average trading volume of 376,023 shares — valuing the company at RM918.94 million.

KPS has seen its share price jump some 47% on a year-to-date comparison, from RM1.18 on Dec 29, 2017.

To recap, the water industry restructuring in Selangor has long been delayed following the failure of the state government and the then Barisan Nasional-led federal government to come to an agreement on the value that should be offered for the takeover of Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH).

SPLASH operates and maintains three major water treatment plants in the state, namely the SSP3 Water Treatment Plant in Rasa (250 million litres per day [MLD] capacity), SSP3 Water Treatment Plant in Bukit Badong (800 MLD capacity), and SSP1 Water Treatment Plant in Bukit Badong (950 MLD capacity).

KPS, which is owned by the Selangor government, has a 30% stake in SPLASH, with Gamuda Bhd owning the other 40%, while the remaining 30% stake is held by Sweet Water SPV Sdn Bhd, which is owned by Tan Sri Wan Azmi Wan Hamzah. Gamuda shares fell three sen or 0.92% to close at RM3.24 yesterday.

SPLASH is the last of four private water concessionaires in Selangor, after three others were taken over by the state under the plan. These include Puncak Niaga Holdings Bhd, Konsortium Abass Sdn Bhd, and Syarikat Bekalan Air Selangor Sdn Bhd.

Over the weekend, hopes that the decade-long consolidation of the Selangor water sector would be concluded were rekindled following Economic Affairs Minister Datuk Seri Mohamed Azmin Ali’s comment that reasonable water tariffs will be imposed once the restructuring plan is finalised — which could be soon.

Mohamed Azmin said the restructuring of the Selangor water industry — which has long been delayed due to the lack of understanding and cooperation between the previous federal government and the state government — will now run smoothly, as there is good cooperation between the Pakatan Harapan-led state and federal governments.

According to Mohamed Azmin, Prime Minister Tun Dr Mahathir Mohamad and Selangor Menteri Besar Amirudin Shari have met recently to discuss the matter and the restructuring of the state’s water industry would be finalised, in accordance with the master agreement signed in 2014.

Amirudin earlier said he was confident of both governments working out a solution to resolve the issue before the July 31 deadline.