Highlight: Water deadlock continues

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KUALA LUMPUR: Despite numerous announcements that the federal government is prepared to invoke Section 114 of the Water Services Industry Act 2006 (WASIA) to end the impasse in Selangor, the commencement date of the invocation remains unknown.

In a statement yesterday, Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili said the federal government, citing national interest, had agreed to invoke Section 114 of WASIA to assume control of all four water concessionaires and a water licensee in Selangor.

This follows the Cabinet’s approval last Friday.

The minister said he had been mandated by the Cabinet to decide on the commencement date of the invocation.

However, Ongkili said the invocation was still conditional on the federal and Selangor governments signing a heads of agreement in respect of the restructuring of the water industry, financial facilitation and completion of the RM4.1 billion Langat 2 water treatment plant as stipulated in a memorandum of understanding (MoU) signed by both parties on Feb 26.

In a separate statement, Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim said following a meeting with Ongkili last Friday, he was told that the process of gazetting Section 114 by the Attorney-General’s chambers had begun, reportedly to take two weeks.

“I have also been provided a draft agreement between the federal and state governments in respect of the MoU signed in February to complete the restructuring of the water industry.

“The Selangor government will examine in detail the draft agreement before signing it and will put the interests of the people and the state as a priority,” said Abdul Khalid.

Section 114 of WASIA allows the federal government to take over the operations of water assets in the name of “national interest”, but does not entail the transfer of ownership of assets.

In essence, the water players are expected to run their operations as usual, but will need to report to three administrators and task force teams appointed by the federal government. This means that there will be a more direct involvement by the stakeholders in running the water operations.

On March 12, the federal and Selangor governments announced in a joint statement that Section 114 of WASIA had been invoked. This was only to be followed by Ongkili saying that the federal government had not invoked Section 114 but was in the midst of doing so, adding that the process would take three months.

He also pointed out that negotiations were still allowed between the Selangor government and the water concessionaires which had rejected the state’s RM9.65 billion offer for their water assets.

Analysts expect talks to continue between the federal and state governments, and the water players — Syarikat Pengeluar Air Sungai Selangor Sdn Bhd, Puncak Niaga Sdn Bhd and Syarikat Bekalan Air Selangor Sdn Bhd — for the takeover of water assets, but this is expected to be a long-drawn affair.

It is understood that caution is being exercised given the implications on the sanctity of government-linked contracts.

According to the National Water Services Commission or SPAN, until March 31 this year, a total of 821 project applications in Selangor, Putrajaya and Kuala Lumpur have been put on hold as adequate water supply could not be guaranteed.

This article first appeared in The Edge Financial Daily, on April 8, 2014.