Federal, Selangor govt sign 'Heads of Agreement' for water supply issue

KUALA LUMPUR: Following is the full text of the joint statement on the Federal Government and Selangor Government signing "Heads of Agreement" for a long term solution to the Selangor water supply issue:
Pursuant to the Memorandum of Understanding (MOU) signed between the Federal Government and the Selangor State Government on February 26, 2014, another milestone has been achieved today with the signing of the Heads of Agreement, signifying the close cooperation and continuous commitment by the two parties to implement long term solutions to the water supply issue in Selangor, Kuala Lumpur and Putrajaya. The Federal Government, represented by Energy, Green Technology and Water Minister Y.B. Datuk Seri Panglima Maximus Ongkili, and the Selangor State Government, represented by Menteri Besar Y.A.B. Tan Sri Dato' Seri Khalid bin Ibrahim, signed the "Agreement between the Federal Government and the Selangor Government on the Implementation of the Memorandum of Understanding Between the Government of Malaysia and the State Government on the Restructuring of the Selangor Water Supply Industry". The signing ceremony was also witnessed by Federal Cabinet Ministers, Selangor state executive councilors and senior officials of the Ministry and the state Government.
This significant breakthrough is the result of several discussions between the two sides with the belief that the welfare and wellbeing of the people should be above political interests to resolve the Selangor water supply issue and restructuring of the water supply industry. Most of the contents of the MoU are detailed out in this Agreement although several key matters have already started implementation, including the Langat 2 Water Treatment Plant and Distribution System Project (LRAL2 Project) and the restructuring exercise. Apart from these are the implementation of mitigation projects funded by the Federal Government to address the water shortage, the Hybrid off River Augmentation System (Horas) implemented by the State Government, and the temporary channeling of raw water via the Projek Penyaluran Air Mentah Dari Pahang ke Selangor (PPAMPS) tunnel to Sg Langat. In the restructuring exercise, the acquisition of the water concession companies by the Selangor Government was initiated once the MoU was signed. To that end, the Selangor Government through Kumpulan Darul Ehsan Berhad (KDEB) has made its takeover offer to the shareholders of the four concession companies; ABASS, SYABAS, Puncak Niaga Sdn. Bhd and SPLASH. As of today, only the takeover of SPLASH has yet to be concluded. This agreement also outlines key actions to conclude the acquisition of the concessionaires. Among them, the transfer of Selangor water assets not linked to the concession companies totaling RM2 billion to Pengurusan Aset Air Berhad (PAAB), a wholly-owned subsidiary of the Federal Government. The proceeds from this transaction will be used by the Selangor Government and KDEB to acquire the equities of the concession companies.
The agreement also stipulates the methods for the restructuring of the water supply industry that involves: a) the consolidation of the water operators under a special purpose vehicle (SPV) fully-owned by the Selangor Government and licensed under the Water Services Industry Act 2006 (WSIA); b) the implementation of an asset light model through the transfer of liabilities and water assets related to the liabilities to PAAB; and c) PAAB will lease back the water assets to the SPV. The Federal Government remains committed to facilitating the restructuring exercise to ensure negotiations continue between the Selangor Government and concessionaires that have not accepted KDEB's offer, to realise the State Government's aspiration to have a holistic and asset light water management for Selangor. This agreement also details out the approaches and commitment of both the Federal Government and Selangor Government to ensure the completion of the LRAL2 Project in mid 2017. With the project's completion, a long term water security can be assured and this will certainly bring relief and comfort to the people. On this matter, the Selangor Government will issue all approvals, including those related to land, planning permission, permits and way leaves for electricity transmission lines, needed for the implementation of the project.
A special implementation committee for the LRAL2 Project co-chaired by the Minister of Energy, Green Technology and Water and Selangor Menteri Besar had also been established. Consequently, two working committees including one chaired by the Selangor State Secretary was established to resolve matters relating to the implementation of the project. The Federal Government and Selangor Government are of the view that the restructuring of the Selangor water supply industry and the LRAL2 Project's implementation must be given full attention for long term security of water supply in Selangor, Kuala Lumpur and Putrajaya. With the signing of the Heads of Agreement today, the direction and the fundamental principles set out will facilitate the work plan to resolve the Selangor water supply issue. This assurance will also enable all development, industrial and commercial projects in the Klang Valley that have been affected by uncertainty of water supply to be continued. Both of us wish to express our gratitude for the support given by all parties who helped make today's agreement a success for the restructuring of the Selangor water supply industry and implementation of the LRAL2 Project, particularly members of the Federal Cabinet, the Selangor executive councillors and officers from the Federal Government and Selangor Government. – Bernama