Saturday, November 13, 2010

Protest or pay for Selangor water rates hike

November 13, 2010

KUALA LUMPUR, Nov 13 — Tan Sri Khalid Ibrahim told Selangor residents today that they either protest or pay higher rates for water as his Pakatan Rakyat (PR) government launched a campaign against a potential bail-out of the privatised state utility.

The Selangor Mentri Besar kicked off the “Return water rights to the Selangor people” campaign which was attended by 500 people at the land office here, although they were aiming for 100,000 people to sign a memorandum to the King.

The state government plans to submit a memorandum to the Yang di-Pertuan Agong on December 5 over the federal government’s possible bailout of Syarikat Bekalan Air Selangor (Syabas).

Top Selangor Pakatan Rakyat (PR) leaders informed The Malaysian Insider last night that the state’s move was part and parcel of a plan to “pressure” the Najib administration not to proceed with a multi-million ringgit bailout of the state’s privatised water industry, and that state-wide ceramahs and gatherings had already been planned in advance to mobilise the numbers needed to attend the December 5 gathering at Istana Negara.

However, Khalid (picture) told reporters today the main goal is to create awareness among the people, when asked if he was confident that the people’s support could pressure the federal government and water concessionaires to give in.

“It’s the people, it could be more than 100,000. I don’t really worry. I don’t really care because after all, we’re taking money out of the people’s pocket. I’m just reminding the people that if you don’t do this, then you have to pay for it,” he said.

Khalid said the government will get council members, Village Development and Security Committee (JKKK) members, aduns, member of parliaments, village chiefs, surau and mosque members to commit their support of the memorandum. He said that group comes up to about 30,000 people.

He said if each of them can get ten people to sign up, then they will easily have about 300,000 signatures.

The state government is fighting for the rights over the water industry and promised to provide the first 20 cubic metres water for free and maintain 12 per cent increase in water tariff, compared to Syabas’ plans of a 20 per cent increase by 2015.

Selangor’s water players — Syabas, Puncak Niaga Sdn Bhd (PNSB), Syarikat Pengeluaran Air Sungai Selangor Sdn Bhd (Splash) and Konsortium ABASS — are at risk of debt payment default as water bonds approach their maturity dates.

The debt service problem started when Syabas was barred from implementing a 37 per cent tariff hike agreed upon in January 2009, after the Selangor government claimed the sole water distributor had not done enough to reduce leakages which cost the state millions.

This in turn led to payment problems between Syabas and water treatment concessionaires PNSB, Splash and Konsortium ABASS, who supply it with treated water.

Khalid insisted that privatisation is not the solution for the state’s complex water issue.

“You’re talking about privatisation. The idea of privatisation is to bring efficiency and also better prices. I know a lot of people are very cynical about privatisation in Malaysia. They don’t call it privatisation, they call it ‘pirate-isation’,” he quipped.

PR leaders have insisted that a bailout would only rescue Barisan Nasional (BN) “cronies” who have profited “tremendously” from the government’s privatisation exercise.

“Our research shows that 20 cubic metres is enough for a family but with a swimming pool or if it’s used for business, that won’t be enough ... so if you use more, you have to pay for it,” the Mentri Besar said.

He assured that under the state’s control, the water concessionaires will not operate at a loss.

“It is time for us to have a movement to open the government’s eyes that water is the people’s rights.

“By taking over the water industry, the state government can make sure that price for water will not go up and the efficiency of handling the water supply can be improved,” he assured.

Tony Pua, DAP national publicity secretary told The Malaysian Insider last night, that the state government had planned 60 events from this week leading up to the date for the handing over of the memorandum.

“We have started the campaign to create awareness over the issue, prepared around 60 ceramahs around the state within the next three to four weeks. The ceramahs include with special focus groups, civil societies as well as church groups,” said Pua.

He added that during the functions, the Opposition leaders plan to zoom on the failure of Syabas to fulfil the concessionaire agreement, the history of privatisation, the high fees charged for privatised water in the country. They will also address the government’s multimillion bailout instead of forcing them to consolidate assets of concessionaires and place it under control, purview of the state government.

Sources told The Malaysian Insider recently that Selangor water bondholders will urge Prime Minister Datuk Seri Najib Razak to intervene directly in the state’s water restructuring deadlock in an effort to safeguard their bonds from being further downgraded.

The Malaysian Insider understands that major bondholders — including CIMB Principal Asset Management, Hong Leong Investment Bank and Great Eastern Life — have drafted a joint letter to Najib asking the federal government to bail out Syarikat Bekalan Air Selangor (Syabas) with a soft loan worth some RM1 billion.

In the letter, the bondholders contend that further downgrades of debt ratings will put capital markets at risk and will seriously impede the government’s effort to promote its Capital Markets Masterplan.

Putrajaya bailed out Syabas once already last year when it gave a RM320.8 million soft loan to parent company Puncak Niaga Holdings Bhd (PNHB) in December to help settle its debts to water treatment concessionaires.

It is understood that the bondholders intend to issue a separate letter to the Selangor state government by early December at the latest to push for a speedy resolution of the state’s water woes.

All four term-loan borrowers are already in technical default following their inability to maintain six months’ worth of reserves in a special account used to pay bondholders. The shortfall is understood to be some RM50 million, although this deficit could double in six months.

The technical default triggered a downgrade of the debt issuances by Malaysian Rating Corp Bhd (MARC) and RAM Ratings Services Bhd on September 8, who warned of further multiple-notch downgrades in this quarter. An industry source told The Malaysian Insider that bondholders suffered RM457 million in mark-to-market losses following the downgrade.

A statement by MARC at the time urged the federal and state governments to urgently interfere in the water industry’s restructuring negotiations to prevent a free fall of ratings in following months.

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