More drama ahead for Selangor water

By Khairul Khalid

Selangor’s chronic water woes may look tantalisingly close to a resolution after the WSIA decision but the main protagonists of the negotiations might still have a few surprises left up their sleeves. KiniBiz gives a roundup of the pivotal figures in Selangor’s water saga.
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The main players in Selangor’s water restructuring drama – the state, federal government and private concessionaires – are delicately poised.

Despite some promising signs of rapprochement for the greater good, the public is increasingly agitated by the conflicting signals sent out by main players, causing confusion rather than assurance.

Water rationing. Dry spells. Critical water levels at dams. Uncertain solutions. All these factors have combined to exact untold economic and psychological tolls on Klang Valley residents in the past few months.

Earlier this year, both federal and state governments hailed an apparent breakthrough by signing a MoU (memorandum of agreement) after years of gridlock.

Recently, the cabinet has approved the invoking of Section 114 of WSIA (Water Services Industry Act 2006) for a forced federal takeover after negotiations with the concessionaires stalled for the umpteenth time.

Now, a solution seems finally in sight. It’s only a matter of time before WSIA is implemented. The Langat 2 water treatment plant, said to be the answer to all of Selangor’s water problems, is finally taking off.

Or is it all too good to be true?

Will Selangor’s water restructuring drama have more unwanted  twists and turns?

Here are the main players that could decide the fate of Selangor’s water supply.

Khalid Ibrahim – the embattled MB

The Selangor Menteri Besar (MB) has endured a torrid few months since signing the water MoU with the federal government earlier this year.

First, he had to stave off criticisms from his own party leaders for cutting a deal with the federal government unilaterally and surrendering Langat 2. Then he had to face the wrath of an irate public deprived of regular water supply.

The Selangor Menteri Besar (MB) set the wheels in motion with the contentious MoU to facilitate a takeover of concessionaires and approve the long delayed Langat 2 water treatment plant.

Khalid took many by surprise with this move. He had claimed as far back as 2010 that there is no need for Langat 2 to be rushed.

He had also assured the public that there will be enough water for Selangor until 2019 and refuted claims of an imminent water crisis in 2014, as had been cautioned by the then Kettha (energy, green technology and water) minister Peter Chin.

“In principle, Selangor is not against Langat 2 but what we question is the need to rush Langat 2 before the whole water restructuring exercise is completed,” Khalid said in a media statement in 2011.

Many saw Langat 2 as Khalid’s big bargaining chip in dealing with the federal government in water restructuring.

What changed Khalid’s mind? Many observers think that the “Kajang Move” pushed him into a corner. The by-election engineered by Rafizi Ramli, PKR (Parti Keadilan Rakyat) director of strategy was rumoured to be the first step in removing Khalid from the MB post.

Now the water crisis has blown up to critical proportions, said to be the worst since 1998.

Water rationing might be prolonged indefinitely as authorities struggle to make up for the shortfall in water levels. Households are burdened, businesses are affected and many investments have been put on hold.

Even if Langat 2 is fast tracked, it will take at least three years to complete.

The Selangor MB is also under pressure from his own Pakatan Rakyat (PR) leaders to make the water agreement more transparent. Khalid is running for the PKR deputy presidency at the end of this month. Even with his decent record in running Selangor, he is seen as an underdog.

Will he survive the PKR party elections and continue leading Selangor’s water negotiations with the federal government and water concessionaires?

There are rumours that if he is pushed out of the MB seat, Khalid could possibly jump into the arms of another political party and that could plunge the water consolidation into jeopardy.

“If I leave, it will be my decision,” said Khalid to Malaysiakini.

We will find out in the weeks and months ahead.

Maximus Ongkili – a federal coup?

The current minister of Kettha, Maximus Ongkili has been seen in many quarters as arguably the surprise winner so far in the water agreement.

The federal government seems to have gained the upper hand in negotiations with the state government after declaring WSIA.

“The Selangor public is the biggest loser in this agreement. Ongkili is now in control,” said Klang MP (member of parliament) Charles Santiago to KiniBiz.

In one fell swoop, Langat 2 that has been delayed for many years was fast tracked. The RM8 billion project to channel raw water from Pahang to Selangor was shelved due to the federal-state impasse.

Although the 45 kilometre-long tunnel is almost complete, Selangor had held the trump card for approving the Langat water treatment plant.

Now, since the MoU several development orders have been signed for Langat 2. Last week, a consortium comprising MMC Corp Berhad, water firm Salcon Berhad and construction player Ahmad Zaki Resources Berhad (AZRB) won a RM1 billion construction contract for the first phase of Langat 2.

Ongkili has also thrown a curveball to those expecting Selangor state to be in control of water matters, post-WSIA.

“We (Putrajaya) will be in control of Selangor’s water production after WSIA. I will lead the team and set the KPI’s (key performance indicators),” said Ongkili.

The Kettha minister explains that the federal government will be in temporary control of Selangor water until the state sorts out a takeover of the water concessionaires. That could be anytime between three months to three years, says Ongkili.

Many had thought that the federal government would lease the concessionaires’ assets back to Selangor. Ongkili flatly denies it, despite having invoked section 114 of WSIA.

“We are still just facilitators. There will not be any actual physical takeover of assets by the federal government. We will just monitor the performance of the concessionaires and make sure they pay their debts. The concessionaires still own their assets. It’s still up to the state to negotiate a deal with them,” said Ongkili.

Still, that would seem to put Ongkili in the driver’s seat for Selangor’s water matters.

Nevertheless, the Kettha minister has warned that water levels are currently dangerously low at the Sungai Selangor dam that supplies roughly 60% of Klang Valley’s water.

If it falls below 30% in the next few weeks, Ongkili has cautioned that the federal government might be forced to declare a water emergency.

Several temporary mitigation plans have also been proposed. One of them is to utilise the almost-complete Langat tunnel to channel water to existing water treatment plants.

“Let’s all pray for rain,” said Ongkili at the Sungai Selangor dam.

Rozali Ismail, Lin Yung Ling and Wan Azmi Wan Hamzah – endgame for concessionaires?

The response by Selangor’s water concessionaires Puncak Niaga, Syarikat Bekalan Air Selangor (Syabas) and Syarikat Pengeluar Air Selangor (Splash) since the federal government’s WSIA decision have varied from acceptance to outrage.

Is it the end of the road in the concessionaires’ long standoff, or could they fight back with legal suits that could further frustrate the federal and state governments?

Despite Syabas’ protracted wrangling with the Selangor state, Rozali Ismail, chief executive officer (CEO) of Puncak Niaga and Syabas, has largely stayed out of the limelight since WSIA was announced.

Nevertheless, recently he seems to have waved the white flag and conceded defeat.

“I do not have any objection over the implementation and enforcement of Section 114 of WSIA (Water Services Industry Act) if it is for the interests of the country and in accordance with existing law,” said Rozali who has a 41.2% equity interest in Puncak Niaga.

He will be calling for an extraordinary general meeting (EGM) soon to present the takeover offer to shareholders. Rozali has also submitted a last-minute appeal to the federal and state government for a reconsideration of Selangor’s last offer to the concessionaires totaling RM9.65 billion that had expired last March.

“I still hope that the state federal governments will consider the billions of ringgit invested by the majority and minority shareholders,” Rozali said. Surprisingly, Khalid has said that he will consider Puncak Niaga’s appeal.

On the other hand, Lin Yun Ling group managing director (MD) of construction giant Gamuda that holds a 40% stake of Splash has lambasted the federal government for resorting to WSIA.

“Investors will start questioning the sanctity of contracts,” Ling said. The Gamuda MD could be hoping that it could still get its way by implying that any federal intervention could spook private investors away from the richest state in Malaysia.

Wan Azmi Wan Hamzah who owns a 30% stake in Splash via his Sweetwater Alliance has been more severe in his lashings on WSIA. He lays the blame solely on the state government led by Khalid.

“We have water crisis today not because of (the faults of) the concessionaires but because the Selangor state government refused to recognise the need to upgrade years ago,” said Wan Azmi in an interview with BFM radio recently.

“MB Khalid said that installed capacity in Selangor would be good all the way to 2019 and Langat 2 was not urgent project and can wait to 2016.”

Clearly, not all the concessionaires will be taking the federal government’s WSIA decision lying down and could already be bracing themselves for a lengthy legal battle.

Anwar Ibrahim – the X factor

Although the Pakatan Rakyat (PR) leader is Selangor’s state economic advisor, he has not been seen to have any direct impact in the water dealings.

Nevertheless, he still wields considerable influence in  PKR whose representatives in the Selangor state assembly are being increasingly disillusioned with being left out by Khalid in important state matters such as the water negotiations.

The “Kajang Move” was initiated by Anwar’s camp purportedly to remove Khalid from the MB seat.  That led Khalid to rush the signing of the water MoU with the federal government. If Khalid is deposed, it could well be back to the drawing board for all parties in the water negotiations.

Tomorrow: Is WSIA fair?