Stop water tariff hike in Selangor
Claudia TheophilusPublished: Jan 24, 2006 8:44 PM | Updated: Jan 29, 2008 6:21 PM
The anti-water privatisation lobby is seeking Prime Minister Abdullah Ahmad Badawi's intervention to halt an impending tariff hike in Selangor and to review the 30-year concession agreement penned a year ago.
Top-level intervention is being sought to stop an anticipated increase in water tariff rates and end water privatisation in Selangor.
The anti-water privatisation lobby is seeking Prime Minister Abdullah Ahmad Badawi's intervention to halt an impending tariff hike in Selangor and to review the 30-year concession agreement penned a year ago.
The Coalition Against Water Privatisation (CAWP) has refuted claims by concessionaire Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) that it's time for a 15 percent increase in water tariff rates.
In an eight-page memorandum couriered to Abdullah today, the CAWP and the Malaysian Trades Union Congress (MTUC) claimed Syabas has been painting a rosy picture of its efforts to reduce non-revenue water (NRW) through "orchestrated leaks" to the media.
CAWP co-ordinator Charles Santiago believed there was an attempt to manufacture consensus in positively casting Syabas' performance in relation to NRW and tariff increase.
"They are trying to manufacture consensus," he told a press conference in Petaling Jaya.
"In the event that the state government does not approve, the concession agreement provides that the state must pay compensation to Puncak Niaga Bhd," he claimed, questioning the credibility of related media reports.
He described media statements by Syabas, industry analysts and the Rating Agency of Malaysia as "not credible" and "misleading" in the absence of an independent audit of NRW.
The coalition also refuted Syabas' reported claims of reducing NRW to between four and six percent, thus paving the way for a 15 percent tariff hike, is impossible for several reasons.
Stop work
Santiago it would have been impossible for Syabas to have reduced NRW when there was a stay order barring it from carrying out related work until 2009.
He said two companies hired by Syabas for NRW Phase 2 work had obtained an order prohibiting it from engaging or awarding contracts to other until the dispute is resolved.
On Aug 1, 2004, Premier Ayer Sdn Bhd and PABW Sdn Bhd obtained an injunction from the Kuala Lumpur High Court to stop the defendants - Syabas, PUAS and a Ng Hian Chuan - from violating their contractual rights.
He said the concession agreement required Syabas to reduce NRW to 37.8 percent by Jan 1 to merit an increase in tariff.
"(But) was Syabas floating these numbers (as per media reports) as part of a public relations exercise posturing for a tariff hike?"
"This raises the very serious question of whether the media has been paid to write and publish reports favourable to Syabas."
He also saw Selangor Menteri Besar Dr Mohd Khir Toyo's latest statement that water tariff hike was not discussed at last week's state exco meeting as a mere eyewash.
Win-only deal
MTUC secretary-general G Rajasekaran said Syabas has no justification to ask for a tariff hike as nothing tangible had been done since signing the agreement on Dec 14, 2004.
"The only ongoing work is the drafting of proposals for concession agreements that guarantee profits without the need to show performance. It's a win-only situation for Syabas," he said, citing the example of the North-South Highway Project (PLUS) concession agreement.
"PLUS used a similar contractual clause to claim a toll hike as of right. But it has never told us during meetings whether its operating expenditure or other costs have increased to justify the higher rates.
"There is no better business than this where the contract itself guarantees revenue or profit."
Syabas holds a 30-year concession which commenced on Jan 1, 2005, until 2029 for the treatment and supply of water, a venture considered as extremely profitable.
The state has retained the loss-making water distribution network under its corporatised water utility, Perbadanan Urus Air Selangor Bhd (PUAS).
The CAWP is demanding for the sweetheart deals and the concession agreement between Syabas, and Selangor and federal governments to be made public.
"The MTUC, CAWP and consumers in the concession area were shocked to discover a clause in the agreement entitling Syabas to a compensation if a tariff hike is not approved.
"The Economic Planning Unit, Selangor government and the Energy, Water and Communications Ministry must account for this lop-sided arrangement," said Santiago.
De-classify deal
Reiterating the stand of the 500,000-strong MTUC, Rajasekaran said the government should stop classifying public documents or tax-funded contracts under the OSA (Official Secrets Act 1972).
"It breeds corruption. The prime minister has declared war against graft. This is one situation where he can halt the ongoing water privatisation particularly in rich states such as Selangor."
He said the OSA classification should only be invoked on grounds of security or in defence of the country.
In the memorandum, the coalition made its case for the termination of the concession agreement, citing several violations as "more than sufficient grounds" for it.
It claimed that by importing pipes from Indonesia sourced from a single company, Syabas had run foul of Malaysian law and the concession agreement.
The alleged breaches include a Finance Ministry circular prohibiting the awarding of a contract without the approval of a special committee and a failure to include a state representative in the tender process.
Santiago said that on June 7, the ministry had issued a show-cause letter to Syabas for violating the agreement but the outcome was not known.
Citing media reports, he claimed Syabas had allegedly acted beyond its contractual scope of supplying treated water by issuing new plumbing licences for RM200 and RM100 upon renewal.
He also asked whether it is justified for consumers to bear the highest director's fee of RM1.5 million Puncak Niaga Bhd chief Rozali Ismail is reportedly paid per annum.
REFSA policy research director Dr Richard Yeoh said the government has broken its pledge to initiate and fund public consultation by non-governmental organisations.
"The water laws are designed to do away with any more concession agreements by placing the whole operations under government ownership."
The ministry has held several briefing sessions with the CAWP and other stakeholders in preparation for the tabling of the two water bills in Parliament in March.
Late last year, civil society bodies, consumer groups and opposition political parties called for a thorough consultation before the bills are introduced in Parliament.
The government has since changed its tune to say that it was pushing for corporatisation of state water management services and not privatisation.
The Coalition Against Water Privatisation (CAWP) has refuted claims by concessionaire Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) that it's time for a 15 percent increase in water tariff rates.
In an eight-page memorandum couriered to Abdullah today, the CAWP and the Malaysian Trades Union Congress (MTUC) claimed Syabas has been painting a rosy picture of its efforts to reduce non-revenue water (NRW) through "orchestrated leaks" to the media.
CAWP co-ordinator Charles Santiago believed there was an attempt to manufacture consensus in positively casting Syabas' performance in relation to NRW and tariff increase. "They are trying to manufacture consensus," he told a press conference in Petaling Jaya.
"In the event that the state government does not approve, the concession agreement provides that the state must pay compensation to Puncak Niaga Bhd," he claimed, questioning the credibility of related media reports.
He described media statements by Syabas, industry analysts and the Rating Agency of Malaysia as "not credible" and "misleading" in the absence of an independent audit of NRW.
The coalition also refuted Syabas' reported claims of reducing NRW to between four and six percent, thus paving the way for a 15 percent tariff hike, is impossible for several reasons.
Stop work
Santiago it would have been impossible for Syabas to have reduced NRW when there was a stay order barring it from carrying out related work until 2009.
He said two companies hired by Syabas for NRW Phase 2 work had obtained an order prohibiting it from engaging or awarding contracts to other until the dispute is resolved.
On Aug 1, 2004, Premier Ayer Sdn Bhd and PABW Sdn Bhd obtained an injunction from the Kuala Lumpur High Court to stop the defendants - Syabas, PUAS and a Ng Hian Chuan - from violating their contractual rights.
He said the concession agreement required Syabas to reduce NRW to 37.8 percent by Jan 1 to merit an increase in tariff.
"(But) was Syabas floating these numbers (as per media reports) as part of a public relations exercise posturing for a tariff hike?"
"This raises the very serious question of whether the media has been paid to write and publish reports favourable to Syabas."
He also saw Selangor Menteri Besar Dr Mohd Khir Toyo's latest statement that water tariff hike was not discussed at last week's state exco meeting as a mere eyewash.
Win-only deal
MTUC secretary-general G Rajasekaran said Syabas has no justification to ask for a tariff hike as nothing tangible had been done since signing the agreement on Dec 14, 2004. "The only ongoing work is the drafting of proposals for concession agreements that guarantee profits without the need to show performance. It's a win-only situation for Syabas," he said, citing the example of the North-South Highway Project (PLUS) concession agreement.
"PLUS used a similar contractual clause to claim a toll hike as of right. But it has never told us during meetings whether its operating expenditure or other costs have increased to justify the higher rates.
"There is no better business than this where the contract itself guarantees revenue or profit."
Syabas holds a 30-year concession which commenced on Jan 1, 2005, until 2029 for the treatment and supply of water, a venture considered as extremely profitable.
The state has retained the loss-making water distribution network under its corporatised water utility, Perbadanan Urus Air Selangor Bhd (PUAS).
The CAWP is demanding for the sweetheart deals and the concession agreement between Syabas, and Selangor and federal governments to be made public.
"The MTUC, CAWP and consumers in the concession area were shocked to discover a clause in the agreement entitling Syabas to a compensation if a tariff hike is not approved.
"The Economic Planning Unit, Selangor government and the Energy, Water and Communications Ministry must account for this lop-sided arrangement," said Santiago.
De-classify deal
Reiterating the stand of the 500,000-strong MTUC, Rajasekaran said the government should stop classifying public documents or tax-funded contracts under the OSA (Official Secrets Act 1972).
"It breeds corruption. The prime minister has declared war against graft. This is one situation where he can halt the ongoing water privatisation particularly in rich states such as Selangor."
He said the OSA classification should only be invoked on grounds of security or in defence of the country.
In the memorandum, the coalition made its case for the termination of the concession agreement, citing several violations as "more than sufficient grounds" for it.
It claimed that by importing pipes from Indonesia sourced from a single company, Syabas had run foul of Malaysian law and the concession agreement. The alleged breaches include a Finance Ministry circular prohibiting the awarding of a contract without the approval of a special committee and a failure to include a state representative in the tender process.
Santiago said that on June 7, the ministry had issued a show-cause letter to Syabas for violating the agreement but the outcome was not known.
Citing media reports, he claimed Syabas had allegedly acted beyond its contractual scope of supplying treated water by issuing new plumbing licences for RM200 and RM100 upon renewal.
He also asked whether it is justified for consumers to bear the highest director's fee of RM1.5 million Puncak Niaga Bhd chief Rozali Ismail is reportedly paid per annum.
REFSA policy research director Dr Richard Yeoh said the government has broken its pledge to initiate and fund public consultation by non-governmental organisations.
"The water laws are designed to do away with any more concession agreements by placing the whole operations under government ownership."
The ministry has held several briefing sessions with the CAWP and other stakeholders in preparation for the tabling of the two water bills in Parliament in March.
Late last year, civil society bodies, consumer groups and opposition political parties called for a thorough consultation before the bills are introduced in Parliament.
The government has since changed its tune to say that it was pushing for corporatisation of state water management services and not privatisation.
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