ONE of the worst
effects of the Barisan Nasional losing power in Selangor to Pakatan Rakyat
since 2008 has been the haggling over control of the state's water assets,
which at times have even put the state, Kuala Lumpur and Putrajaya on the brink
of a crippling water crisis.
It
all started when early into his administration, the then Selangor mentri besar
Tan Sri Abdul Khalid Ibrahim decided on what he called the restructuring of the
state's water assets for "better services and lower tariffs".
He
made it seem like his pet project and was even obsessed with it at times, even
to the extent of having an axe to grind with the federal government for
privatising the assets and granting four concession companies to run Selangor's
water in 2004.
Because
Selangor is the country's most developed state and key industrial hub with
already superb infrastructures, he could afford to spend a lot of time on this,
unlike his counterparts in largely rural-based states like Sabah and Sarawak –
which are still grappling with basic needs like roads, water supply and
electricity.
And
that's what Khalid did for most of the six years he was MB.
A
key issue with the concessionaires was overpricing and striking willing buyer
willing seller deals, while between the state and federal governments, they
were over legal and land matters.
Finally
in February last year, the deal was struck with the signing of a memorandum of
understanding (MoU), allowing the Selangor government to take over the equity
of the four concession companies.
To
show how relieved the federal government was with the end of the protracted
tug-of-war, Prime Minister Datuk Seri Najib Abdul Razak, then deputy prime
minister Tan Sri Muhyiddin Yassin and Chief Secretary to the Government Tan Sri
Dr Ali Hamsa were present when Khalid and Energy, Green Technology and Water
Minister Datuk Seri Dr Maximus Ongkili signed the MoU in Putrajaya.
But
cracks began to appear within the Selangor government quite soon after, with
internal efforts under way to replace Khalid as MB, and concerns were expressed
about the fate of the water deals.
These
worries were not unfounded because in March this year, Mohamed Azmin Ali (who
took over from Khalid in September last year) revoked the water supply industry
agreement, accusing the federal government of breaching the pact on matters
concerning land acquisition.
For
a while, what I called in several previous columns on this issue as Selangor's
water chronic politics that Khalid started, seemed to worsen as both sides
traded barbs.
Ongkili
told Parliament in June that the restructuring exercise could not be fully
resolved yet following the Selangor government's failure to fulfil the
conditions in the master agreement with the federal government.
But
it was not all doom and gloom. Common sense, which is not at all common among
politicians on both sides of the political divide, did prevail. Azmin, when
presenting Selangor's 2016 Budget on Oct 30, announced that the state
government had finalised the takeover of water services two weeks earlier.
As
Azmin put it, the water industry is now back in the ownership of the Selangor
people, which means the agreement with the federal government is back on track.
The
Selangor government takes over lock, stock and barrel assets and liabilities
worth RM9.65 billion while the federal government has injected RM2 billion to
facilitate the takeover exercise.
Of
the RM2 billion from the federal government, RM1.68 billion has gone into
paying the shareholders of three of the four concessionaires – Puncak Niaga Sdn
Bhd, Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) and Konsortium Abbas Sdn
Bhd, while talks with the fourth concessionaire, Syarikat Pengeluar Air
Selangor Sdn Bhd (SPLASH) have broken down after it rejected the RM250 million
valuation offer by the state government.
But
the biggest cheer out of all the mess created by Selangor's water politics
should be for the Langat 2 water treatment plant, whose construction has now
begun in earnest after a long delay.
This
all too vital project initiated by the federal government to cater to rapidly
growing clean water demands of Selangor, Kuala Lumpur and Putrajaya up to the
year 2025, should have been completed in 2013, if not for Khalid's refusal to
grant a development order for construction to start.
It
has been used as a pawn in the negotiations by Selangor in the takeover of the
assets instead of being treated as a separate issue given its critical
importance.
Giving
credit where it's due, Putrajaya has always given the highest priority to the
Langat 2 plant, costing about RM2 billion that will treat raw water pumped by
pipelines from Sungai Pahang hundreds of kilometres away.
Federal
ministers and officials have openly expressed their exasperation against
Selangor's apparent game of political one-upmanship, over the development order
and land approvals, and other permits connected to the project.
Their
worst fears were confirmed when residents and industries had to endure a spate
of water rationing in the past few years with the more critical one occurring early
last year.
One
major multinational food and beverage manufacturer in Shah Alam reported losses
running into RM15 million daily during the height of the water disruptions.
This
single act of not signing that piece of paper called "development
order" has also proven to be very costly indeed for the taxpayers too,
plus the loss of new wealth to Selangor's economy.
Azmin
announced in his budget speech that the state government would fund the
construction of two water treatment plants, costing about RM800 million to
mitigate water shortage, while waiting for the completion of Langat 2.
And
the bad news is that due to all the delays, the new date for Langat 2 to be
fully operational has now been set for 2019, six years later than the original
schedule. Overall, its construction has reached only 20%.
A
senior Ministry of Energy, Green Technology and Water official told me that
besides the RM800 million to be spent by the Selangor government for the two
plants, the federal government itself has used up RM1 billion for mitigation
projects to upgrade capacity at existing treatment plants, in order to prevent
supply shortages.
"This
means the RM1.8 billion from both governments is enough to build another
treatment plant of the size of Langat 2 to cater to Malacca, Negri Sembilan and
Johor combined. Or for another three states of Kelantan, Terengganu and Pahang,
or even Sabah and Sarawak," the official said.
On
top of that, he said, because of the delay of Langat 2, some 800 projects were
deferred in Selangor due to the shortage of treated water.
"You
can imagine the losses to the economy and equally important, thousands of job
opportunities lost," he added.
Actually,
the takeover of the water assets by the Selangor government that ended the
federal government's privatisation effort, is fraught with ironies and
uncertainties.
In
the first place, the privatisation was done due to the inefficient ways of the
then government entity, Jabatan Air Selangor in managing the state's water
supply. Suffice to say, the privatisation effort has achieved its objective
with much greater efficiency under the concession companies.
They
would have even been more efficient had it not been for political interference
by the state.
What
Khalid once described as "better services and lower tariffs" shall
remain a pipe-dream because Azmin has already talked about the need to increase
water tariffs following the takeover of the concessionaires by the new
government-owned, Air Selangor.
Can
another government department be more efficient than a private company?
And
to top it all, how could the Selangor government monetise its assets or ensure
return on investment with its free water policy for the first 20 cubic metres
of consumption?
This
free water of the Khalid era has led to consumers' habit of wasting this vital
resource, and if you ask me, this policy should go. It's free for consumers but
let's not hide the fact that the Selangor government is paying heavily to the
concessionaires all this while. Again, it's the taxpayers' money.
Water
is life and no one minds paying for it.
Let's
once and for all, stop playing politics over water because if there's a water
crisis, needless to say, it's the mother of all crises.
The Sun