PUTRAJAYA, 12 Dec 2008: Some 1.5 million consumers in Selangor, Kuala Lumpur and Putrajaya may have to pay higher water tariff of about 37% more if the Selangor government does not hand over its water service assets to Pengurusan Aset Air Berhad (PAAB) by March next year.
The reason is that the 30-year concession agreement, dated 1 Jan 2005 to 31 Dec 2034, signed between the federal government, the Selangor government and Syabas, can be revoked and the water tariff can be restructured after the assets have been handed over, Energy, Water and Communications Minister Datuk Shaziman Abu Mansor said today.
He said according to the concession agreement, the water tariff in the three areas should be increased by 37% on 1 Jan 2009.
However, the federal government has agreed to extend until 31 March 2009 for the Selangor government to hand over its water assets to PAAB, failing which the federal government would have no choice but to accommodate Syabas’ request for an increase in the water tariff as contained in the agreement, he told reporters at his office here.
Shaziman said the Selangor water service assets were worth RM5.5 billion, which included main pipes, water treatment plants and water catchment areas, and that the assets belonged to the Selangor government and the four water concessionaires in the state — Syabas, Puncak Niaga, Splash and Abas.
He said the handing over of the assets by Selangor to PAAB, which is under the Finance Ministry, was aimed at reducing the financial burden of water management in Selangor, which also supplies water to Kuala Lumpur and Putrajaya.
This, he said, was because PAAB would take over management of the assets, including their debts, through transfer of the assets, which would then be leased back to the Selangor government and its water concessionaires at a lower rate.
Shaziman said PAAB was capable of taking the risks because of the low interest rate on federal government loan, as well as the flexible repayment period, compared with the state government which had to obtain bank loans for funds to manage the assets.
He said the Selangor government had yet to hand over its water assets because it wanted to restructure the water tariff first.
He said according to the National Audit Department’s estimates, Syabas could increase the tariff by 30% although the agreement stated 37% because the company had met almost all the conditions.
Shaziman also said that Malacca would be the first state to hand over its water assets to PAAB with the signing of an agreement on the matter on 17 Dec 2008 and to that effect there would be no increase in water tariff in the state in 2009. — Bernama