- In a press statement released yesterday evening, The Ministry of Energy, Green Technology and Water has clarified that there is no top-up of RM3bil to the RM9.65bil offer to take over the water concessionaires in the state.

- The ministry was clarifying a news report which came out yesterday that stated the ministry was allocating an additional RM3bil to take over the water concessionaires.

- In the statement, the ministry noted that the RM3bil comprises “RM1.97bil or up to RM2bil” set aside by the Federal government via Pengurusan Aset Air Bhd (PAAB) to help the Selangor state purchase the equity portion of the concessionaires.

- Another RM1bil refers to the spending for mitigation measures to resolve the water supply problem in the state – thus, the total RM3bil that was quoted in the report.

- The ministry affirmed that the total amount of the takeover of the four concessionaires remains at RM9.65bil, including the RM2bil intended for equity purchase.

- The ministry’s clarification is in line with our assertion in our report yesterday that the RM3bil pertains to PAAB’s allocation for the takeover.

- Note that the RM2bil transaction would be done through the transfer of the Selangor government’s water asset to PAAB. PAAB will then lease these assets to the state government for a fee.

- Given the clarification, we believe that the water restructuring is still status quo as we await the finalisation of share sale agreements between the state and the respective water concessionaires.

- As it is, we understand that the new Menteri Besar Mohamed Azmin Ali has yet to approach the water concessionaires to finalise the sale agreements. Recall that Syabas, Puncak Niaga Sdn Bhd (PNSB), and Konsortium Abass Sdn Bhd have agreed in-principle to the offers since last Dec.

- We maintain NEUTRAL. We remain optimistic that a fair offer could be reached for the takeover of SPLASH in order to achieve a complete closure to the water saga.

Source: AmeSecurities