KUALA LUMPUR (June 11): Puncak Niaga Holdings Bhd warned today that it would cancel the sale of its water assets to the Selangor state government if the impasse between the state government and the federal government over the restructuring of Selangor’s water industry remains unresolved after Ramadhan.

In a statement this evening, Puncak Niaga executive chairman and managing director Tan Sri Rozali Ismail said the issue has remained unresolved for far too long.

“We sincerely hope that there will be no further extension of time of the stop date of the sales and purchase agreement (SPA) after the month of Ramadhan as the matter has prolonged for far too long and if the matter is still unresolved, Puncak Niaga will be left with no choice but to invoke its legal rights to rescind the SPA with Air Selangor (Pengurusan Air Selangor Sdn Bhd) and both PNSB (Puncak Niaga (M) Sdn Bhd) and Syabas (Syarikat Bekalan Air Selangor Sdn Bhd) will have to recommence their ongoing legal suits, which had been put on hold pending the completion of the consolidation/restructuring of Selangor’s water industry, to recover the outstanding debts owed by the state government of Selangor,” he said.

He added that the debts had ballooned to RM4.97 billion as at March 31, 2015, “due to tariff hike not being implemented, as stipulated under the Syabas concession agreement as both PNSB’s and Syabas’ cash flows and operations had been severely constrained due to these high accumulated debts not paid over the years”.

To recap, Puncak Niaga signed a conditional SPA on Nov 11, 2014 with Air Selangor on the proposed disposal of its water assets PNSB and Syabas for RM1.555 billion. 

In its statement, Rozali said the delay in completing the restructuring of Selangor’s water industry by the federal government and the state government of Selangor has also resulted in “severe repercussions and inconvenienced the consumers” in Selangor and Kuala Lumpur and Putrajaya of their rights to treated water.

He lambasted them for bandying the phrase “Wait for restructuring!” repeatedly when PNSB and Syabas wanted to initiate any programme that to improve the level of services for consumers. 

“This scenario has been ongoing since 2008 and has not seen the light of day till today,” he said.

“To date, we understand that Air Selangor is still not able to fulfill the conditions precedent in the SPA and there may be a further extension (sixth extension) of the stop date before the proposed disposals can be completed to facilitate the consolidation/restructuring of the Selangor Water Industry to be managed by the State Government of Selangor via its state-owned entity, Air Selangor,” Rozali added.

Rozali said under the terms and conditions of the SPA, all conditions precedent were supposed to have been fulfilled on Jan 12, 2015, whereby upon completion, Puncak Niaga will hand over its water concession business in Selangor under PNSB as well as SYABAS to the Selangor government and get paid by the Selangor government. 

“This stop date has been extended for several times to enable the pending issues related to the water asset transfer between the state government of Selangor and the federal government to be resolved. The latest stop date being the fifth extension of time of the SPA fall due on June 11, 2015,” he said. 

Meanwhile, due to the uncertainties surrounding the conclusion of the restructuring of Selangor’s water industry, he said Puncak Niaga will be seeking its board of directors’ decision to consider a sixth extension of the stop date under the SPA. 

Puncak Niaga closed 7 sen or 2.6% lower at RM2.62 today, for a market capitalisation of RM1.09 billion.