Posted: 28 May 2011 07:38 AM PDT
The Edge Financial Daily reported that Syarikat Pengurusan Aset Air Bhd (PAAB) will acquire the bonds issued by the Selangor state water concessionaires through its-wholly owned subsidiary Acqua SPV Bhd for the amount of RM6.5 billion. The paper further quoted a market source that "in terms of price, the buying back is at 94.49 against mark to market value of only 54.54 at the end of last month".
It is bad enough that the Federal Government has decided to bail out the Selangor water concessionaires, but for it to pay a whopping 73.2% higher than the market vallue of these bonds borders on being outrageous and an abuse of taxpayers' monies.
This rescue deal for the private concessionaires is reminiscent of the Malaysian Airlines System bailout when the Federal Government paid RM8.00 per share, or 121% higher than the market price of RM3.62 per share to Naluri Bhd, owned by Tan Sri Tajuddin Ramli in December 2000. In fact, the Government has yet to see any returns on its "investment" for the stock price has slumped to RM1.59 (as at yesterday) or a 80.1% decline for its investment after 10 years. The company continues to be troubled as it made RM242.3 million in losses for its first quarter this year in its financial results released this week.
It is inexplicable that the Government has decided to settle the outstanding bonds of these privatised water companies when it should be the shareholders of these companies themselves who should be responsible for their debt.
In fact, when these companies were profitable, they have declared handsome dividends for their shareholders. Among the concessionaires, Syarikat Pengeluaran Air Sungai Selangor Holdings (SPLASH), whose parent company is Gamuda Bhd, declared dividends of RM578.6 million in 2007 while Puncak Niaga Holdings Bhd had declared dividends amounting to RM214 million between 2006 and 2010.
The above certainly makes true the dictum of the BN Government privatising profits and socialising losses by taking over the debt burden of these companies.
The debt bailout is worsened by the fact that the Government has not been transparent with the whole exercise when the Minister of Energy, Water and Green Technology, Datuk Peter Chin announced that there has been no cabinet decision on the matter earlier this week.
To date, we still do not know how the Federal government plans to restructure the water industry in Selangor based on the Water Services Industry Act 2006 after taking over these debts and whether these private concessionaires would be required to repay the Government for the bailout.
The Minister must no longer pretend to be clueless about the entire exercise and disclose the full terms of the bailout exercise as this affects the basic right to water of all residents in Selangor, Kuala Lumpur and Putrajaya as well as billions of ringgit of tax-payer's monies. Unless of course, he is completely powerless in his own Ministry, with key decisions made without his knowledge, in which case, he should then just resign honourably to protect his personal reputation and integrity.
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