KUALA LUMPUR: Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) said that the unresolved water restructuring issue has serious economic implications due to the delay of a number of projects, including the Langat 2 project.

In a statement, Syabas and Puncak Niaga Holdings Bhd (PNHB) executive chairman Tan Sri Rozali Ismail said the postponing of these projects has resulted in the foregoing of the supply of a total of 850.82 million litres of water to 1,038 new developments.

“The postponing of these big projects involves billions of ringgit in investment, and will definitely impact the economic growth of the country, and has also resulted in the loss of employment opportunities in Selangor, Kuala Lumpur and Putrajaya,” said Rozali.

To recap, PNHB agreed to sell its unit Puncak Niaga (M) Sdn Bhd (PNSB) and its 70%-owned Syabas to Pengurusan Air Selangor Sdn Bhd (Air Selangor) for RM1.55 billion on Nov 11, 2014.

Following the sale of water assets, PNHB shareholders are also expected to receive a special dividend of RM1 per share, which translates to a 37% dividend yield. However, the transfer of water assets had been extended three times to April 9, 2015, due to the non-fulfilment of the conditions precedent stated in the conditional sale and purchase agreement (SPA).

While the Selangor government stated last Monday that no further extensions will be granted for the agreement between the two governments, Air Selangor submitted a third extension request last Friday to PNHB, extending the time for the fulfilment of the SPA to April 9.

In his statement on Saturday, Rozali also said the request by Air Selangor will be deliberated by the management of both Syabas and PNSB before being considered by the board of PNHB.

Note that the master agreement signed between the federal and state governments lapsed on March 9, due to a dispute between the two parties. 

The latest development puts PNHB’s special dividend in jeopardy, as the Selangor water restructuring exercise remains unresolved.

At an extraordinary general meeting on Jan 7, PNHB’s shareholders approved the disposal of its entire equity interest in PNSB and its 70% stake in Syabas to Air Selangor for approximately RM1.6 billion.

PNHB had also obtained its shareholders’ approval for a special cash dividend of a minimum RM1 per share, up to a maximum total distribution of RM534.4 million or approximately RM1.28 per share.

This article first appeared in The Edge Financial Daily, on March 16, 2015.