Return IWK services to local councils, says Pua

By Clara Chooi, The Malaysian Insider

KUALA LUMPUR, Oct 6 — DAP MP Tony Pua today urged Putrajaya to return Indah Water Konsortium’s (IWK) sewerage treatment and management business to the local councils, pointing out the centralisation of its services had resulted in a costly bailout for the government.

He, however, lauded the Finance Ministry’s response in Parliament today that IWK would not be privatised but instead restructured and placed under the Energy, Green Technology and Water Ministry.

But, said the Petaling Jaya Utara MP, the government should “take a further step” by decentralising IWK’s services, reminding that prior to 1994 local councils were in charge of sewerage treatment.

“The IWK was formed in 1997 as part of (former prime minister) Tun Dr Mahathir Mohamad’s privatisation initiative and took over all the relevant functions from the local government authorities.

“To ensure increased effectiveness and greater responsiveness to issues faced by the people, it is crucial that the local councils are empowered to manage its services,” he said in a statement handed out in Parliament today.

Putrajaya said yesterday it had spent RM1.2 billion to sustain IWK since nationalising the national sewerage company in 2000.

The Finance Ministry said that IWK had racked up liabilities amounting to RM2 billion, while its assets are valued at about RM1.2 billion.

It also said that there are no plans to privatise IWK but the Energy, Green Technology and Water Ministry would be restructuring the sewerage industry, reviewing sewerage tariffs and guaranteeing future capital expenditure.

Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah had said on September 10 that IWK would be merged with a government unit, confirming a report by The Malaysian Insider.

Ahmad Husni said that the merger process was already under way but declined to disclose the name of the government subsidiary, except to say that IWK would continue to be government-owned after the merger.

The Malaysian Insider reported on September 8 that IWK would be privatised into a consortium led by strategic investment agency 1MDB, some 11 years after the government was forced to bail out the national sewerage company from financial difficulties under its previous owners.

Finance Ministry sources had recently told The Malaysian Insider that the 1MDB-led consortium will include water distribution company Puncak Niaga, and that the deal has been given the nod by the Economic Council chaired by Prime Minister Datuk Seri Najib Razak.

Under the proposed deal, the 1MDB consortium was to acquire IWK for RM1 and take over its debts which include more than RM1.5 billion in loans still owed to the ministry.

The consortium is seeking a 60-year concession from the government and will only pay back the principal amount and interest on the loan over the long term.