Khairy’s attempt to paint the Federal Government a saint in the Selangor water crisis is a joke

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Khairy is telling us is that the Selangor Government was irresponsible for not agreeing to the BN-sponsored privatisation agreement.

Tony Pua

I have read with amusement Minister of Youth and Sports, Khairy Jamaluddin’s second attempt to score political points against the Selangor government over the recent shortage of water.
To quote his essay, his argument is “premised upon two very simple facts”.
The first, he says, is that the Selangor government’s refusal to allow for tariff increase as provided for in the concession agreements, alongside its altogether failed attempts to purchase water assets, has led to the water companies, especially Syabas, failing to spend adequately to maintain the distribution system and reduce leakages or non-revenue water (NRW).
This argument is as laughable as saying that because the Selangor government and its people refused to pay a king’s ransom demanded by the water concessionaires, who are supported by the BN Federal government, Selangor is to be blamed.
Only BN politicians, who were responsible for signing a completely lopsided privatisation agreement benefiting its cronies will care less about the plight of the people suffering from unjust price hikes.  We are not talking about a 5% hike every three years.  We are talking about an agreement which allows SYABAS to raise rates by a whopping 37% in 2009, 25% in 2012 and 15% in 2015.
With the monopolistic state-backed opportunity to raise rates, there was clearly little incentive for the company to be interested in coping with non-revenue water which was the highest in the country. This is despite the fact that Selangor residents were already suffering from consuming the most expensive water in the country (before Johor’s private concessionaire raised its water tariffs in 2010).
Worse, a national audit report on SYABAS which the Federal Government refused to declassify – found damning evidence of abuse of expenditure on luxury cars, excessive non-water related expenses, as well as breach of the private concession agreement through millions of ringgit worth of directly negotiated tenders and undocumented expenses.
What Khairy is telling us is that the Selangor Government was irresponsible for not agreeing to the BN-sponsored privatisation agreement to enrich the shareholders of these water concessionaires.
The Selangor Government did the most logical thing by offering in 2009 to acquire all the water concessionaires on terms in accordance with the privatisation agreements.  However these concessionaires were not satisfied with the compensation which gave them a minimum 12% return on capital as specified in the contract, and demanded instead for compensation for the loss of future profits.  If we agree to pay for the loss of future profits, which was not required in the concession agreements, then we might as well not bother with the takeover exercise at all!
Khairy is mischievous to forget the fact that the BN Federal Government went out of its way to back these water concessionaires against Selangor, which led to an impasse of the takeover exercise. In 2011, when these water concessionaires were unable to repay their loans amounting to RM6.5 billion, the Selangor Government had offered to take over these companies and their debts.  Instead, the Federal Government decided to bail out these concessionaires by paying for the RM6.5 billion debt.  With the concessionaire relieved of their immediate debt obligations, these water concessionaires did the only logical thing to maximise profits – that is to stall on the takeover exercise and demand a king’s ransom.
Despite the obvious interventions by the BN Government to the detriment of Selangor, Khairy had the cheek to say that they were “forced” to bailout these water companies.
The Minister’s second argument was to blame the Selangor government’s refusal to approve the construction of the Langat 2 water treatment.
First of all, the Langat 2 water treatment plant would not have been ready today even if the approval was granted in 2009.  Secondly, the Federal Government cannot absolve itself from blame because it refused to cooperate in the state’s water restructuring exercise.  Without securing the future of the water industry in the state, it would be foolish for the Selangor government to grant further concessions to the Federal Government and their interested parties to further profit at the expense of the people.
It was only 2 months ago this year that the Federal Government via the Memorandum of Understanding with the state finally agreed to “facilitate” the takeover exercise.  Even so, it has failed to deliver its part of the bargain to date – that is to cajole these companies into selling their assets, if not to exercise the Federal Government’s powers under the Water Services Industry Act (WSIA) to takeover these companies.
The state government is not without blame in the Selangor water crisis. But it is not for the laughable reasons outlined by the Minister of Youth and Sports.  The state government was obviously too confident of completing the takeover exercise over the last five years and failed to take contingency measures to deal with the consequences of protracted negotiations.  The rakyat who placed their trust in the state government had expected better from us.
Regardless of the outcome of the latest attempt to consolidate the fractured Selangor water industry, the Selangor Government must take all necessary measures to improve and increase the state’s raw water supplies and reserves to cope with future shortfalls, whether man-made or natural.  This must be done without sacrificing the interest of the Selangor people, and profiting the long-time cronies of Barisan Nasional.