‘SPLASH TAKEOVER NOT COSTLY’
Air Selangor denies claim that state govt paid 10 times the value of water concessionaire
PENGURUSAN Air Selangor Sdn Bhd (Air Selangor) denied the allegation that the Selangor government paid 10 times the value of Syarikat Pengeluar Air Selangor Sdn Bhd (SPLASH), following its takeover.
Its chief executive, Suhaimi Kamaralzaman, said the allegation by former mentri besar Tan Sri Abdul Khalid Ibrahim was not true, as the value of SPLASH was not RM250 million.
“The figure (RM250 million) was obtained based on the rate of returns of 12 per cent on its share investment, which was done when the concession agreement kicked off in January 2000, and until Dec 31, 2012. This was minus the dividend, which was paid beforehand.
“The figure, which was offered to SPLASH shareholders was made in 2013. Based on the SPLASH financial statement, which was audited, its net book value as at March 31 stood at RM1.84 billion.
“The RM250 million offer made in 2013 was done at a 86 per cent discount to Splash’s net book value,” he said in a statement here yesterday.
Last Wednesday, the New Straits Times Press reported that Khalid had claimed that SPLASH’s purchase value of RM2.55 billion was too high compared with his offer of RM250 million.
He said the acquisition was a burden to the people, which was likely to be seen through an increase in water tariffs.
However, Selangor Menteri Besar Amirudin Shari said the water tariffs would remain unchanged, but that would depend on the state’s finances.
Suhaimi said the acquisition of SPLASH was based on the principle of “willing buyer, willing seller”, where the seller and the buyer must come to an agreement before the acquisition is finalised.
“Over the past five years, shareholders rejected the proposal to sell SPLASH at RM250 million due to a huge discount on SPLASH’s net book value.
“Due to a five-year delay in the takeover, the backdated arrears for treated water stood at RM4.7 billion, so in April, SPLASH began legal proceedings to recoup the outstanding arrears.”
Suhaimi said RHB Investment Bank, which was appointed by the state government, had valued SPLASH at RM2.5 billion based on the net book value method as at March 31, 2015.
“The independent Federal Governmentappointed appraiser, Deloitte, confirmed an acquisition cost of RM2.7 billion was reasonable and fair.
“Ernst & Young also said the net book value of SPLASH on March 31 last year was at RM2.8 billion. Hence, the value of RM2.55 billion offered was lower than the certified value.”
Suhaimi said Air Selangor rejected allegations that SPLASH was granted a special privilege, as a higher discount was used for the acquisition compared with the discount in the acquisition of Puncak Niaga (M) Sdn Bhd (PNSB) in 2015.
“Among the benefits of the SPLASH takeover is the completion of the water services industry restructuring. This comprised bonds and loans involving the four water concessionaires amounting to more than RM8 billion, which will be acquired by Pengurusan Aset Air Berhad (PAAB) and restructured as rental lease payments.
“The state government’s debt to the Federal Government, which exceeds RM1.1 billion for water-related projects, will be restructured in the form of rental lease payments.
“All concession agreements granted to private companies will be terminated and there will be no multiple profits enjoyed by concessionaires, such as SPLASH.
“The base supply rate for treated water by SPLASH, which is at RM1.37 per cubic metre (m3), will drop to a more reasonable rate of between 42 sen and 44 sen per m3.”
Suhaimi said the completion of the water services restructuring exercise would provide opportunities for better financing terms for capital expenditure projects. This would be financed by PAAB through the lease method for 45 years, which would be lower than commercial loans.
“In addition, water-related projects, such as dams, would be financed by the Federal Government through grant allocations.
“These benefits cannot be enjoyed without a resolution to SPLASH’s takeover.”