Tuesday, May 27, 2008

Selangor eyes four firms involved in water production


SHAH ALAM: Selangor wants to take over the four companies involved in water production and distribution in the state to “bring more benefits to the people”.

The state has three water producers – Konsortium ABASS, Puncak Niaga Sdn Bhd and Syarikat Pengeluar Air Selangor Holdings Bhd (Splash) – while Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) distributes water.

Selangor Mentri Besar Tan Sri Khalid Ibrahim said the takeover through its state government subsidiary Kumpulan Darul Ehsan Bhd (KDEB), was part of a programme to restructure and reorganise the water industry in the state.

He said the initial work for the takeover, which is expected in September, had been completed and “serious discussions” with the companies involved will be carried out over the next three to four months.

“KDEB already has shares in some of the companies so there will be a valuation and reorganisation, where KDEB will offer cash or shares for the acquisition of the companies,” he told a press conference during a break at the state assembly sitting here yesterday.
Khalid said the takeover would be carried out through acquisitions or purchases of assets and also long-term financial facilities. He said the cost involved would not be to the extent that the risk and returns were unacceptable to the state.

“The plans for the takeover were approved by the previous state government and got the Cabinet’s nod in January. On Feb 5, The Water, Energy and Communications Ministry issued its letter of approval for KDEB to head the takeover. “The previous state government wanted to bring all four companies under one group. “It was part of the original reorganisation of the four companies that was proposed by the earlier state government but we are bringing in plans to increase the benefit for the people,” he said, adding that one of it was the offer of free water to the people.

Khalid said the takeover would also give the state government the right to look into agreements that were lopsided to benefit the companies involved. Asked if the takeover meant an end to moves to increase tariffs, Khalid said tariff increases were determined by the Water, Energy and Communications Ministry. The state, however, would not be making any proposals for such increases.

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