- Bernama reported that the Federal government is mulling a plan to construct temporary pipes to supply water to Sg. Langat. The water pipes measuring 1.5km from the tunnel will supply water from Pahang to the proposed Langat 2 Water Treatment Plant (WTP).

- Under the proposal, raw water will be channelled to the existing WTPs at Sg. Langat. The 1.5km-long pipes are seen as a short-term measure to address the water crisis in the Klang Valley while waiting from Langat 2 to kick-off.

- Last week, the local media reported that Pengurusan Aset Air Bhd (PAAB) had approved a bid by a JV comprising Salcon, Ahmad Zaki Resources Bhd and MMC Corp for the construction of the Langat 2 WTP and associated water reticulation system. Construction works on the WTP, valued at ~ RM1bil, are expected to take 3 years to complete.

- The proposal to construct the temporary pipes will be submitted to the Cabinet for deliberation as it involves costs as well as consent from the Pahang government.

- According to Deputy Minister of Energy, Green Technology and Water, Datuk Seri Mahadzir Khalid, construction of the tunnel to channel the raw water from the Semantan River in Pahang to Langat 2 is now more than 90% completed. This stretch covers approximately 46km. If approved, construction of the temporary pipes could commence by October or November.

- While the actual value and quantum is not immediately known at this juncture, we envisage that large diameter pipes (> 1,000mm) may be required.

- Similarly, we expect tenders for the water pipe package and reservoirs for Langat 2 to be prioritised now that Langat 2 appears to be taking off. Our channel checks indicate that at least four players have been shortlisted for this upcoming package, particularly for the large diameter pipes.

- We see JAKS Resources (non-rated) as a potential beneficiary of the water pipes package as it is the only player capable of delivering large diameter water pipes on a supply-and-lay basis. Apart from JAKS Resources, Boon and Cheah Steel Pipes Sdn Bhd was the other company that supplied pipes for the existing Langat water supply schemes.

- Notably, JAKS is the only integrated water engineering specialist capable of delivering large diameter pipes (of up to 3,000 mm) on a supply and lay basis.

- JAKS is currently undertaking the water pipe package for the Pahang portion of the Pahang-Selangor interstate raw water transfer project via a JV with IJM. Notably, the contract was won under an international tender. 

Source: AmeSecurities