IF corporate tussles and political dramas were made into reality TV, then Tan Sri Abdul Khalid Ibrahim’s resignation as Selangor menteri besar would be the season finale of the state’s six-year water consolidation saga.

The state’s largest water treatment operator, Syarikat Pengeluar Air Selangor Holdings Sdn Bhd (SPLASH), has held out on the government’s takeover offer, but both the state and federal governments have signed a “master agreement” to restructure Selangor’s water industry and nationalise the companies.

Khalid, who was determined to take over the water assets on his terms, was removed from office by his own Pakatan Rakyat (PR) coalition members.

In a dramatic turn of events, Sultan Sharafuddin Idris Shah handpicked Khalid’s successor — an unprecedented move in the country’s system of constitutional monarchy.

In a nutshell, this scuttled PR de facto leader Datuk Seri Anwar Ibrahim’s plan for his wife, PKR president Datuk Seri Dr Wan Azizah Wan Ismail, to be menteri besar.

The responsibility for concluding Selangor’s water consolidation exercise now rests with new Menteri Besar Mohamed Azmin Ali.

It is worth noting that Minister of Energy, Green Technology and Water Datuk Seri Dr Maximus Ongkili has given the Selangor government until next September to reach an agreement with SPLASH.

Check out the newsmakers involved in this convoluted saga. - by Kamarul Anwar

Tan Sri Abdul Khalid Ibrahim
Former Selangor menteri besar

Worried about escalating tariffs and high non-revenue water, Khalid promised to re-nationalise Selangor’s water assets after he took office in 2008.

He made multiple offers between 2009 and last year — ranging from RM5.7 billion to RM9.65 billion — to take over the assets of the water concessionaires in the state. Nonetheless, for every offer, there was at least one concessionaire that found the valuations unattractive.

Khalid, a former CEO of Permodalan Nasional Bhd, thought he could wrest control of the assets aided by a newfound partnership between the Selangor and federal governments. However, this did not sit well with Parti Keadilan Rakyat (PKR).

In fact, it compounded his party’s dissatisfaction with his performance as menteri besar. Some PKR insiders gave him the alliterative epithet “Khalid Kedekut” (“Stingy Khalid”) for refusing to spend the state’s increasing reserves, which amounted to RM2.71 billion in the last state budget Khalid tabled in 2013.

Shortly after being fired from PKR, Khalid was removed as menteri besar by the state assembly. He resigned in August, marking the end of an era.

Datuk Lin Yun Ling
Managing director, Gamuda Bhd and Tan Sri Wan Azmi Wan Hamzah, chairman, Splash

When Lin met The Edge in March to express concern over a forced takeover of Selangor’s water operations by the federal government, many newspapers and portals picked up the report.

This was because Lin is a media-shy corporate chief despite heading a company worth RM12 billion in market capitalisation.

His concern was that the invocation of Section 114 of the Water Services Industry Act 2006 (Wasia) would challenge the sanctity of contracts in Malaysia and thus unsettle investors.

SPLASH, a 40% unit of Gamuda, had accepted the Selangor government’s offer at least twice previously. However, Wan Azmi told The Edge in March that the state government refused to make up the difference between SPLASH’s assets and its liabilities in its last offer.

This would reduce the water treatment operator’s net gain to RM250.6 million (from the 12% return on equity payment by Kumpulan Darul Ehsan Bhd). SPLASH’s shareholders’ funds at the time of the offer was RM2.54 billion.

As other concessionaires have been offered compensation that is equal to their book value, Lin and Wan Azmi have been steadfast in seeking a fair reimbursement. They even challenged Khalid’s administration in court when he revoked SPLASH’s licence to source for raw water.

Regardless of whether the government follows the private water companies’ takeover precedent of compensating shareholders at the book value of assets or with a payment that would put the company in the black, the delay in a fresh offer to SPLASH would result in a bigger loss to public coffers as the water treatment plant operator’s book value is growing by the year.

At the recent Gamuda annual general meeting, Lin said SPLASH’s current book value was RM2.8 billion as its accumulated profit was increasing steadily.

Datuk Seri Dr Maximus Ongkili
Minister of Energy, Green Technology and Water

Khalid has repeatedly said it was not his call to invoke Section 114 of the Water Services Industry Act 2006 (Wasia) and that only “the minister” has the discretion to take over water concessions for the sake of “national interest”.

The minister in question is Ongkili. He agreed earlier this year, much to Khalid’s delight, to exercise Section 114 due to the water shortage in the Klang Valley. However, after much protest, the Wasia threat was quietly dropped. Besides, as some would argue, why punish the water operators for water shortage when Khalid was the one who refused to approve the construction of the Langat 2 dam?

Ongkili has also repeatedly said the federal government would like the squabble between Selangor and the water companies to be settled with a willing buyer-willing seller deal.

With the master agreement for Selangor’s water restructuring signed by the Khalid administration and the federal government in September, Ongkili has given the Selangor government until September 2015 to complete the deal with SPLASH.

Datuk Seri Anwar Ibrahim
Pakatan Rakyat de facto leader and husband of Datuk Seri Dr Wan Azizah Ismail, Parti Keadilan Rakyat president

Anwar was deputy prime minister in 1998 before he fell from grace. Groomed to take over from then prime minister Tun Dr Mahathir Mohamad, the two had a spectacular falling out and Anwar was terminated from all government posts.

Sixteen years later, Anwar was denied the chance of being Selangor menteri besar when the Court of Appeal overturned his acquittal on charges of sodomising his former aide Saiful Bukhari Azlan, thus disqualifying him from running for public office.

Anwar then made his wife Wan Azizah the candidate for the Kajang by-election so she could replace Khalid as Selangor’s menteri besar.

Questions, fair and otherwise, were asked about her experience and ability to manage the affairs of Malaysia’s richest state. Emphatically sexist remarks were made by both sides of the political divide about a woman’s fitness to be menteri besar.

Many say this was 67-year-old Anwar’s (by proxy) last shot at holding a significant position in government. Yet, if he holds true to his mantra of “lawan tetap lawan” (“fight to the finish”), Anwar could wait four more years for the next general election and fight again for control of the federal government.

Mohamed Azmin Ali
Selangor menteri besar

A month after his 50th birthday on Aug 25, Azmin received a belated present — the position of Selangor menteri besar.

Finally out of his mentor Datuk  Seri Anwar Ibrahim’s shadow, Azmin made an impact immediately by tabling a RM2.35 billion state budget — Selangor’s biggest.

Also, the allocation for development was as big as that for operations. This was unlike during Khalid’s administration when only a third of the state’s budget was for development.

While his large budget is exciting, investors will be watching closely to see how he handles the takeover exercise of SPLASH, which might or might not take place before the federal government’s deadline of September 2015.

Sultan of Selangor Sultan Sharafuddin Idris Shah

Instead of calling an emergency state assembly meeting or an election, the sultan dismissed PKR and DAP’s nomination of Dr Wan Azizah Wan Ismail as head of the Selangor government.

He appointed Mohamed Azmin Ali as menteri besar, saying that the PKR deputy president would have the support of his party and PR.

Some say the sultan’s distrust of Anwar is the reason for his decision to ignore Wan Azizah’s nomination and also to strip Anwar of his datukship.

The Selangor menteri besar crisis had put the sultan in a difficult position by leaving the final decision with him. His choice of Azmin  solved the  problem but set a precedent that has stirred debate.

Tan Sri Rozali Ismail
Executive chairman, Puncak Niaga Holdings Bhd

In June, Rozali, who owns 40.86% of Puncak Niaga, agreed to sell water treatment operator Puncak Niaga Sdn Bhd (PNSB) and water distributor Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) for RM1.55 billion to the Selangor government. Puncak Niaga expects the disposal to be completed by the first quarter of 2015.

The group plans to set aside RM534.3 million for a bumper dividend payout and RM1.02 billion for future investments “yet to be identified”.

Rozali has been elusive, although he did speak to the media at Puncak Niaga’s last AGM in June, when he said the group might venture into the plantation sector because “settler’s blood” flows in his veins.

Puncak Niaga, which has exposure to the oil and gas industry, saw a turnaround in the segment in the third quarter ended Sept 30, 2014, although profit was a meagre RM7.52 million on revenue of RM154.15 million.

After rising to an intra-day high of RM3.74 on Nov 12 following its announcement of the sale of its water assets, Puncak Niaga’s stock fell to a two-year low to close at RM2.29 on Dec 15. Will Rozali pull a surprise with the announcement of Puncak Niaga’s possible business ventures and stir interest in the counter again?

This article first appeared in The Edge Malaysia Weekly, on 22 - 28 December 2014.

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