KUALA LUMPUR: The federal and Selangor governments are expected to sign a supplementary agreement today, which will see the state maintaining ownership of its water assets and Putrajaya proceeding with the long-delayed development of the Langat 2 water treatment plant project.
The deal will effectively put an end to the Selangor water impasse, which has been dragging on for more than eight years.
According to a source close to the matter, the federal government has conceded most of the key points of contention in the master agreement by the Selangor government, led by Menteri Besar Mohamed Azmin Ali, that have stalled efforts to finalise the state’s water restructuring.
“A key [point of] contention was that ownership of land that the water assets sit on remains with the state government post-restructuring, as opposed to the federal government taking over all assets for free,” the source told The Edge Financial Daily.
It is understood that the ownership of assets such as the Semenyih and Bukit Nanas water treatment plants will also remain with the Selangor government under the supplementary agreement.
In May, Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili announced that both the federal and state governments had agreed to resolve the Selangor water impasse within two months.
According to the minister, the Selangor government had promised to honour all the commitments made to expedite the issuance of the necessary approvals for permits and land required for the Langat 2 project and its distribution system.
Yesterday, Bernama reported Kumpulan Perangsang Selangor Bhd (KPS) as saying it hoped that the Selangor water restructuring will be resolved soon so the group does not continue to incur debt.
Its chairman Raja Datuk Idris Raja Kamarudin said following the delay in the restructuring exercise, KPS has been saddled with debts of close to RM1 billion.
“As a company with the biggest stake in the water industry, we want the water restructuring to be expedited. This is because as a commercial company we are faced with various pressures, especially financial pressure, whereby our debt has reached RM1 billion to date,” he was quoted in the Bernama report as saying after KPS’ annual general meeting.
KPS holds a 30% stake in Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) and 90.83% in Konsortium Abass Sdn Bhd.
The water restructuring had stalled after Selangor refused to grant the federal government a third extension to the master agreement signed by former Selangor menteri besar Tan Sri Abdul Khalid Ibrahim and Ongkili on Sept 14 last year.
Investors reacted positively to the news of the impending signing of the supplementary water agreement today, with shares in Puncak Niaga Holdings Bhd rising as much as 6.4% to hit an intra-day high of RM2.82 yesterday.
The stock closed 4.15% higher at RM2.76 yesterday, bringing a market capitalisation of RM1.15 billion.
Puncak Niaga, which recently extended the disposal of its water assets to Pengurusan Air Selangor Sdn Bhd (Air Selangor) — the sixth extension to date — to July 13, 2015, had threatened last week to rescind its deal with Air Selangor if the water impasse between the state and federal governments remained unresolved after Ramadan.
Under the sale and purchase agreement, Puncak Niaga will dispose of its entire equity interest in Puncak Niaga (M) Sdn Bhd, together with a 70% stake in Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), to Air Selangor for RM1.55 billion cash.
KPS shares also closed up 5% at RM1.47 yesterday, with a market cap of RM733.54 million, while water pipe maker Jaks Resources Bhd, which is seen as a potential beneficiary of the Langat 2 project, saw its share price rise 6.67% to settle at 72 sen. Gamuda, which has a 40% stake in Splash, saw its share price rise 0.4% to close at RM4.96, with a market cap of RM11.93 billion.
This article first appeared in The Edge Financial Daily, on June 25, 2015.