Selangor could pay more for water assets

PETALING JAYA: The Selangor state government may have to fork out more than the RM1.55 billion offer price agreed to for the takeover of Puncak Niaga Holdings Bhd's water assets with a fifth extension to the sale and purchase agreement (SPA) with Pengurusan Air Selangor Sdn Bhd.
Yesterday, Puncak Niaga Holdings Bhd executive chairman and managing director Tan Sri Rozali Ismail said the proposed takeover of the Selangor water concession by the state government, which has been delayed four times from February, has resulted in, among others, loss of revenue and investment opportunities for the group.
"There is a high possibility that the board of directors of PNHB may ask for an increased offer price," Rozali said in a stock exchange filing yesterday.
PNHB is currently seeking approval from its board to consider a fifth extension for the fulfillment of conditions set under SPA between PNHB and the state government's water entity, Air Selangor, to enable the pending issues related to the water asset transfer between the state government of Selangor and the federal government to be resolved.
Rozali said the RM1.55 billion from Air Selangor was based on a 12% return of investment calculated up to the financial year ended Dec 31, 2012.
"As such, PNHB has not been accorded with any returns for the past two preceding financial years for the financial years ended Dec 31, 2013 and Dec 31, 2014 and until to date," he said.
Rozali also said that over the past few months, PNHB had to forgo, and lost several investment opportunities arising from the delay and uncertainty in the completion of the SPA.
He also revealed that due to the delay, PNHB's wholly owned subsidiaries, Puncak Niaga Sdn Bhd (PNSB) and Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), were "directed to put on hold several critical and major improvement plans on the operations of the water treatment and water distribution systems".
This, Rozali said, has carelessly caused unnecessary hardship to consumers leading to an unhealthy environment in Selangor and the federal territories of Kuala Lumpur and Putrajaya.
"It has taken too long for both the Federal and State Government to resolve this restructuring. Since 2008 till now, over a period of seven years, PNSB and Syabas are not able to implement many programs to improve their services as the instructions given by the authorities are 'wait for the restructuring'," Rozali said.
He added that the sharp depreciation of ringgit against the dollar over the recent months has led to PNHB's overseas investment costs to rise.
PNHB was banking on its overseas expansion as a growth driver for both its water solution and oil and gas businesses with the disposal of its water assets.
Rozali also pointed out that the imposition of the Goods and Services Tax has further increased the operating costs of both PNSB and Syabas.