Nine bidders for construction of Rasau water treatment plant

This article first appeared in The Edge Malaysia Weekly, on October 25, 2021 - October 31, 2021.
Nine bidders for construction of Rasau water treatment plant
-A +A

THE tender for the construction of a 700 million litres a day (MLD) Rasau water treatment plant, which closed earlier this month, is understood to have attracted as many as nine bidders.

The tender — valued at between RM1.7 billion and RM2 billion — was called in May by Pengurusan Air Selangor Sdn Bhd (Air Selangor), which has the mandate to supply treated water to Kuala Lumpur, Selangor and Putrajaya.

A contract is likely to be awarded at the end of the year while the construction of the water treatment plant is to be completed in 2024.

Air Selangor executives declined to comment when contacted, citing it as “improper” to reveal any information on the bidders. There is also likely to be confidentiality agreements and requirements in place with regards to the tender process.

Nevertheless, it is understood that of the nine bidders, two are Selangor state-controlled entities while another four are strong public-listed companies, namely IJM Corp Bhd, Gamuda Bhd, Taliworks Corp Bhd and Salcon Bhd. The rest of the bidders are not known and could be smaller private companies.

A source says George Kent (M) Bhd — which has been involved in various segments of the water sector since the early 1990s and undertaken jobs in Port Moresby, Papua New Guinea — could be partnering with one of the Selangor state-controlled entities bidding for the contract.

“There is a lot of lobbying going on, but I feel the Selangor state entities have a good chance [of winning the contract],” says another source.

A market observer familiar with the water sector questions the high price tag of between RM1.7 billion and RM2 billion, saying that the rule of thumb is that it costs RM1 million per MLD.

An executive with a water treatment concessionaire, however, explains, “What needs to be understood is that the dirtier the water [that needs to be treated], the higher the cost will be. In this case, we are not looking at treating water from the Alps [which is pristine, but quite the opposite in this case],” he says.

The bidders

As far back as 1996, IJM had a 36% stake in the Binh An water treatment plant, which had a 25-year concession to supply treated water to parts of Ho Chi Minh City in Vietnam. In 2009, IJM, Shimizu Corp and UEM Builders Bhd, as part of a consortium, won a RM1.3 billion contract to construct a 45km tunnel through the Titiwangsa mountain range and build a pump station as part of a multibillion-ringgit Pahang-Selangor interstate water transfer project.

For its first quarter ended June 2021, IJM chalked up a net profit of RM65.68 million from RM1.31 billion in revenue. At the stock’s closing price of RM1.88 last Wednesday, the group had a market capitalisation of RM6.85 billion.

Gamuda, meanwhile, held 40% equity interest in Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH), the concession holder of the Sungai Selangor Water Supply Scheme Phases 1 and 3, which controlled about 45% of the treated water supply to Selangor, Kuala Lumpur and Putrajaya.

However, in May 2019, SPLASH was sold to Air Selangor for RM2.55 billion. Nevertheless, Gamuda still operates and maintains the Sungai Selangor Dam and the Rasa and Bukit Bandong water treatment plants, which produce as much as 1,050 MLD a day.

For its financial year ended July 2021, Gamuda registered a net profit of RM588.32 million from RM3.52 billion in sales. Its shares ended trading at RM3.26 last Wednesday, translating into a market value of RM8.19 billion.

Salcon is a known water treatment player locally, and had expanded into China, but sold out of those businesses in 2016. Back home, it has a 36% stake in the 1,130 MLD Langat 2 water treatment plant, which was constructed after Salcon and its partners secured a RM1 billion contract in April 2014.

For the six months ended June this year, Salcon made a net profit of RM8.6 million from a turnover of RM303.12 million. Its share price ended at 22 sen last Wednesday, valuing the company at RM222.73 million.

Taliworks’ wholly-owned unit Sungai Harmony Sdn Bhd has an operations and maintenance contract for Phase 1 of the Sungai Selangor water treatment plant. Until October last year, the company also operated the water supply and distribution in Langkawi, Kedah.

For the six months ended June this year, Taliworks posted a net profit of RM24.95 million from RM127.54 million in sales. Its share price closed at 83.5 sen last Wednesday, giving the company a market value of RM1.68 billion.

For its first financial quarter ended June, George Kent raked in RM11.79 million in net profit from RM61.28 million in sales. Its shares ended trading at 70.5 sen last Wednesday, translating into a market capitalisation of RM396 million.

While the tender for the Rasau water treatment plant, which is under the first package, closed earlier this month, the tenders for packages two and three — which make up the piping, pump station and retainer pond, or loosely termed the distribution system, valued at around RM1 billion — are understood to have closed in August, but the details are not readily available.

 

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.