January 2009: Pakatan Rakyat’s attempt to restructure the water industry and avoid increasing water tariffs
“There should be one operator that manages the water operation, so we have to take back the concession from the operators before April [2009].”
Selangor Menteri Besar Tan Sri Khalid Ibrahim explaining that the privatisation of the state’s water assets to four different concessionaires had created an inefficient and fragmented industry. Under the existing agreements, water operators are allowed to raise rates periodically. He said if the government took over the concessions and restructured the tariff formula, it could avoid increasing water prices. (Source: Selangor aims to take over water assets in March, The Star, 24 Jan 2009)
February 2009: Federal government intercepts Selangor government’s negotiations with water concessionaires
“…before the concessionaires were able to respond to the state government’s offer by 20 Feb, we were shocked that the Energy,Water and Communications Ministry, via Datuk Teo Yen Hua, the CEO of the National Water Services Commission (SPAN), announced on 18 Feb that the federal government would proceed to negotiate directly with the water concessionaires.”
Pakatan Rakyat Members of Parliament Tony Pua, Charles Santiago, William Leong and Dr Dzulkefly Ahmad, in a 24 Feb 2009 press statement.
Selangor had been in negotiations with the four water concessionaires in the state to acquire their assets for RM5.71 billion. Federal government agency SPAN however then announced it would negotiate directly with the four concessionaires. This led to a breakdown in negotiations between Selangor and the four companies, which remains unresolved till today. (Source: Federal govt sabotages Selangor, The Nut Graph, 24 Feb 2009)
July 2010: DPM says Selangor’s water concessionaires facing financial problems and water crisis looms
“[The Selangor government] thought they were doing something popular with their election promise. They gave free water and promised that water prices would not go up. They are absorbing RM13mil a month and are facing big deficits.
“However, they say they cannot afford to pay (the concessionaires) if the cost keeps going up. If they don’t pay, the water processing companies will suffer losses as they too are facing problems as the cost of managing and processing water is very high.”
Deputy Prime Minister Tan Sri Muhyiddin Yassin saying the Selangor government’s move to provide free water and not increase tariffs was taking a toll because the state had to absorb the cost. He said Selangor and Kuala Lumpur would suffer a water crisis in two years unless the state government solved the water problem.
Muhyiddin also said the federal government was facing stumbling blocks with the RM9 billion Pahang-Selangor raw water transfer project because of the Pakatan Rakyat-led Selangor government. (Source: DPM: Selangor heading for water crisis, The Star, 12 July 2010)
July 2010: Buyout and restructuring of Selangor water concessionaires still unresolved
“Despite the fact that Syabas had breached various terms of the concession agreement, if not for the fact that Pakatan Rakyat won in the last general election, the company would have enjoyed substantial increases in tariff rates, reaping lucrative profits as a result. We’d like to ask Muhyiddin, why is the federal government using taxpayers’ monies to bail out and subsidise a private company?”
“We call upon the BN government to allow and support the Selangor government’s initiative to consolidate the industry under the state, which will not only save Syabas from its agony, eliminate the need for the federal government to give interest-free loans, but most importantly, allow the people of Selangor and Kuala Lumpur to enjoy improved water services at lower prices.”
Petaling Jaya Utara Member of Parliament Pua calling on the federal government to stop hindering the Selangor government’s effort to buy over the water concessionaires and take over water management.
Pua, who is also DAP national publicity secretary, disputed Muhyiddin’s claim that Selangor was heading towards bankruptcy over its water tariffs. Pua said the “free water” in Selangor was funded almost entirely from profits from its minority interests in the water companies.
He said the BN had signed an unfair privatisation agreement with Syabas, allowing it to raise rates by 37% in 2008, 25% in 2011, 15% in 2014, and 10% every subsequent three years thereafter. (Source: DAP: Muhyiddin shielding Syabas over Selangor rates, The Malaysian Insider, 12 July 2010) 
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thokiat says
Jelas sekali BN sedang merancang dan mensabotaj urusan air di Selangor yang memang menyenangkan rakyat jelata Selangor & Kuala Lumpur untuk dijadikan SATU LAGI PORJEK KERAJAAN BN yang hanya menguntungkan syarikat kroni dengan membebankan rakyat. TPM yang telah menjadikan harga air di Johor melambung kini tidak malu mengkritik kerajaan Selangor yang mampu memberi air percuma dengan belanjawan seimbang, tak lain dari ketam mengajar anak berjalan lurus.
Tan says
Why can’t our politicians look into the management of water resources in Penang as it has been charging the lowest per unit to Penangites thus far? Privatisation should lead to more efficient management and lower unit cost of doing business but in Malaysia it is always the opposite. In Johor, the unit cost is among the highest in Malaysia after privatisation. Fortunately, in Selangor this practice is temporary suspended due to the wisdom of the State Government’s effort to neutralise it through its stake in all the concessionaires. Or else consumers in Selangor will have to pay through their throats every few years due to its lopsided contract that favours concessionaires. At least for highways, at times we can avoid by traveling a longer distance but not for water as there isn’t any substitution and is a necessity for every human being. So BN MPs and ADUNs should come to their senses and support the restructuring that benefits the citizens instead of being confrontational and partisan.
Ellese A says
Very bad reporting. Just skimming the surface.
Why can’t you ask simple questions:
-Was the offer by Selangor commercially acceptable given that the concession company is public listed and holds huge bonds?
-Is it true when Tony said it’s entirely financed by minority interests in the water companies? Do the numbers tally?
-What is actually Selangor’s consolidation plan. Who’s paying for it? How does Selangor intending to pay back?
-Did Selangor’s negotitation break down because of SPAN’s negotiation or was it already broken down because of the low offer by Selangor?
Do a bit of diligence by answering the above to find the truth. Most are public knowledge already to those in the industries. You should not rely merely on people’s spin to analyse an issue.
Adam says
Who caused Selangor’s water woes? Ask those who privatised the operation of all the water treatment plants to Puncak Niaga and the others and you get the answer.
When about 40% of water produced is lost through leakages, theft and other reasons, how can you balance the accounts when the concessionaires are charging for 100% of water produced?
When you also find out who is involved in the privatisation of the plants in Johor, you would also find the reason why someone is shielding SYABAS.
Ellese A says
You wrote:
When about 40% of water produced is lost through leakages, theft and other reasons, how can you balance the accounts when the concessionaires are charging for 100% of water produced?
For your info, most non-revenue water is lost at the distribution side, i.e. pipes that lead to your house. If you don’t receive the water, you won’t be charged. No consumer is paying for water loss outside their house. Thus your question is misplaced.
Adam says
My dear Ellese A,
You have missed my point. I was trying to answer the question of the article. To do that, we have to go back to the time (mid 90’s) when the problems started and that was when the state government privatized the operation of the major plants to Puncak Niaga and the others.
The concessionaires would charge JBAS/PUAS(now SYABAS) based on 100% of treated water produced but from the plants to the consumers, 35%-40% of the water would be unaccounted for (NRW) and losses could be through the trunk mains, reservoirs (overflow), distribution pipes, connections, etc. Theft (un-metered connections), under-registering and tampering of water meters also form part of NRW. Meter under-registering is due to poor quality meters being used and this could be serious. Since SYABAS has changed the original meters to the yellow China-made ones, my water bill has dropped by about half and I am not complaining.
So, when JBAS/PUAS could only bill consumers for 60%-65% of the water, how do you expect them to balance their accounts. Surely, they would be making losses and unable to pay the concessionaires. That was what happened and debts of over RM1 billion were accumulated over the years. So, they privatized JBAS/PUAS as well and formed SYABAS with Puncak Niaga holding 70% share. And the saga continued to this sad day….
Now, do you understand? The lesson we could learn from this episode would be “How to take over a government agency”. I cry for Malaysia.
mykantree says
What are they [trying to achieve] by privatising all these public facilities? To be more cost effective? More efficient? Improve supply and service levels? Educate me, which privatised public facility or service has achieved any of the above? And I mean improvements over and above what it would/should have been able to achieve in their previous status, i.e. a public facility.
Ellese A says
There are many good examples worldwide. In Malaysia, PLUS has maintained highways much better than under JKR. Other examples: Maxis; Telekom. TNB has been managed much better than before. In UK, telecommunications, electricity and water companies are all privatised.
Pencinta Air says
Selangor State Government shouldn’t jeopardize Syabas and Puncak Niaga staff. Thousands of Selangorians worked for them. Don’t punish them because of the high level battle game.
Now, Selangorians will suffer with the treated water crisis soon, and what are the steps taken by the State government to solve this issue?
Do you want still to drag this issue in the coming years?
The current state government is fighting with the federal but don’t bully the PN and Syabas’s staff and the rest of Selangorians.
Adam says
The state government is trying to save the rakyat for paying more for water by buying back the contracts but the federal government is putting obstacles all the way to frustrate the state government. From RM5 over billion to RM9 over billion and now they raise up the price to RM12 over billion.
The federal government does not have the rakyat at heart. They only protect their cronies and that is a fact no one can refute. If they have a conscience they would have taken back all the privatisation contracts such as PLUS, LDP,IPPs, Water contracts, etc.
I really feel sad for Malaysia. I am too old to fight. I leave it to the younger generation to fight for their own future. No eye see.