Ongkili: Selangor must make offer to Splash, agree price tag first

KUALA LUMPUR: With the Oct 5 deadline looming, the Energy, Green Technology & Water Ministry is still insistent that the Selangor state government make the next move in the water restructuring exercise.
Minister Datuk Seri Panglima Dr Maximus Johnity Ongkili said the state government must make an offer to Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) and agree on a price tag before the federal government can determine how it will assist with the acquisition cost.
“I am waiting for the Selangor government. I have answered in Parliament and many times publicly that the principle is ‘willing buyer willing seller’. They must make an offer to Splash then come back to us and ask how much the federal government can help,” he told reporters at the opening ceremony of the 7th IWA-ASPIRE Conference 2017 yesterday.
“I am only the arranger, I cannot name a price for them. They must make an offer to Splash. They know the valuation, they know the value, just make an offer to Splash because it will take a long time. Splash has to go to its board, it is a listed company,” he said.
On the federal government’s proposal for a 60:40 ratio to acquire Splash equity, with the state government bearing 40% of the cost, Ongkili said there has been some preliminary discussion but the final decision depends on the acquisition price agreed upon between the state government and Splash.
The federal government will look at the state government’s capacity to pay and how much help the government has provided previously, for the acquisition of three other companies under the restructuring deal.
“Based on that, we have to discuss at federal government level how much we can help. We will be reasonable. We need to check whether they have assets to back their borrowings and then we will see, subject to what we have already assisted and how much we can assist them.
“But this thing can only take place after they have signed the sale and purchase agreement,” Ongkili said.
He declined to disclose how much of the acquisition cost the federal government is willing to bear but said that it is negotiable.
On the independent valuation carried out by Deloitte, Ongkili said the report is meant to be the federal government’s third valuation and the details will not be shared with the state government.
“Two banks previously have given us the price and so we wanted to be confident because assets can devalue moving forward but borrowings and loans increase with interest. So we have to go through that process,” he said, adding that the state government has also done its own valuation and has a value for the asset.
On whether the Oct 5 deadline will be extended again should the state government fail to make an offer to Splash, Ongkili said there will be further discussions with the state government.
In 2014, the Selangor state government and the federal government signed an agreement which would see the state government take over four water concessionaires operating in the state, namely Puncak Niaga Holdings Bhd, Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Konsortium Abbas Sdn Bhd and Splash.
The state government has already taken over water assets belonging to the three companies, except for Splash, which has been delayed twice from Oct 7, 2016 to April 7, 2017 with the latest deadline being Oct 5, 2017.
Note that Splash owes some RM530 million in receivables to Taliworks Corp Bhd as of March 2017, which is recoverable, provided the Splash acquisition issue is resolved.