Puncak, Gamuda fall as S’gor bids to nationalise water
The Selangor government is attempting to take over the water assets from the concessionaires in the state, namely Puncak Niaga, Splash, and Syabas. The state government wants to nationalise the inefficient water sector - and prevent a 30 per cent tariff hike from April.
The concessionaires, on the other hand, are asking for a much higher price, based on discounted cash flow (of future profits) and future tariff hikes assuming the concession is allowed to continue.
The Selangor government wants the price to be based on asset book value plus a return on capital less dividends paid out previously. They are arguing that the concession cannot be assumed to continue. They are offering a total of around RM6 billion, “but the concessionaires are of course asking for the sky,” said a source familiar with the negotiations.
One of the concessionaires has apparently spent RM50 million on office refurbishments. Another has paid out huge sums in directors’ fees. Open tenders have not been used in certain deals.
The three main concessionaires in the lucrative - and relatively easier - water treatment sector are:
- Puncak Niaga - controlled by Rozali Ismail. It has around 30 water treatment plants.
- Abass - 55% owned by Selangor government’s KPS and 45% by Rangkai Aman Sdn Bhd
- Splash - 40% owned by Gamuda, 30% by KPS and 30% by the Sweet Water Alliance.
The main company involved in the more difficult distribution sector is:
- Syabas - 70% owned by Puncak Niaga and 30% by Selangor’s Kumpulan Darul Ehsan Berhad (KDEB).
Selangor’s KDEB is hoping to acquire the assets, hand them over to the federal-owned Pengurusan Aset Air Bhd and lease them back as the sole concessionaire.
But the existing private concessionaires are asking for a much higher price than what the Selangor government is willing to pay.
One investment analyst told me the Selangor state government could opt for a partial offer of Puncak shares if the company is not willing to play ball which could result in a delisting and greater control over the company - even if the state government holds just a minority stake.
No comments
Post a Comment