- Both the Federal and state governments will proceed with the water restructuring exercise in Selangor soon even if the concessionaires do not accept the offer by Kumpulan Darul Ehsan Bhd (KDEB), Selangor Menteri Besar Tan Sri Abdul Khalid said in The Edge Financial Daily report today.
- Abdul Khalid said that the governments are expected to conclude the final round of discussions on the matter within the next two weeks, after which they intend to begin the restructuring process.
- He also noted that both governments are in favour of a “mutual agreement” with the concessionaires, when asked about the invocation of Section 114 of the Water Services Industry Act (WASIA).
- Recall that last week Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili said that the Federal government intends to kick-start talks with the water concessions soon.
- Ongkili said the Fed government was still open to discussions to reach a “willing buyer, willing seller” basis to acquire the water assets, despite signalling its intention to invoke Section 114 of WASIA.
- In our talks with water players, we understand that they have met in discussions with the Federal government in regards to the WASIA but are adopting a “wait-and-see attitude” for the impending offer.
- While Abdul Khalid has stressed that the state government has no plans to increase its offer, we note that the dynamics of the negotiation process may change this time around as the concessionaires will be negotiating directly with the Federal government.
- As for the state government’s intention to terminate the raw water licences, our checks with concessionaires reveal that no letters have been sent thus far.
- We maintain NEUTRAL on the water sector as we await a new offer from the Fed government. We have a HOLD for Puncak Niaga with a fair value of RM3.40/share, which is based on the last offer made in Nov. We also have an implied value of RM1.42/share for KPS (non-rated).
Source: AmeSecurities
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