PUTRAJAYA, Malaysia - The Federal Government and Selangor finally found common ground on terms that will facilitate the implementation of the Langat 2 water treatment plant project and the takeover of water assets in the state.
Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili and Selangor Mentri Besar Tan Sri Khalid Ibrahim signed a memorandum of understanding (MoU) that effectively breaks a five-year impasse that has stalled the implementation of water projects in the country's most industrialised state.
Prime Minister Datuk Seri Najib Tun Razak and Deputy Prime Minister Tan Sri Muhyiddin Yassin witnessed the signing - a signal that the MoU has the blessing of the top leadership of the Federal Government.
Some PKR leaders were caught unawares by the signing of the MoU, and it is unclear if Khalid has the backing of the top Pakatan Rakyat leaders to agree on the terms.
The price tag offered to the four concessionaires in the state remains at RM9.65billion (S$3.72 billion).
This is the first time that the state and federal governments have firmed up an agreement to work out the mechanics of the consolidation of the water assets in Selangor since the exercise started in 2009.
An integral part of the MoU is the Selangor Government giving an undertaking to facilitate the implementation of Langat 2.
The state has agreed to issue the Development Order and facilitate land acquisition for the construction of Langat 2 that has stalled since 2009.
The water treatment plant is an integral part of the RM8.65bil Pahang-Selangor Raw Water Transfer project that entails the transfer of water from Pahang to the Klang Valley.
The Pahang portion of the project that has been awarded to a consortium led by Japanese companies is almost done. But the Selangor side of the job has yet to take off.
The treatment plant can process 1,130 million litres per day and is anticipated to meet the needs of Selangor, Kuala Lumpur and Putrajaya until 2025.
Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili represented the Federal Government while Mentri Besar Tan Sri Khalid Ibrahim signed for the Selangor Government.
In return for facilitating the implementation of Langat 2, the Federal Government will allocate RM2bil to the state to be used in the acquisition of the four water concessionaires operating in Selangor.
The four are Puncak Niaga Sdn Bhd, Syarikat Bekalan Air Selangor Sdn Bhd, Syarikat Pengeluar Air Selangor Sdn Bhd and Konsortium ABASS Sdn Bhd.
The Federal Government through the Pengurusan Aset Air Bhd (PAAB) has also allocated RM900mil for water mitigation initiatives in Selangor as an interim relief until Langat 2 is completed.
Khalid said the funds would be use to build a water catchment facility at Bestari Jaya in Kuala Selangor.
He also said the state government expected to complete the takeover of the four concessionaires within three months, including share acquisition.
He said the state's offer of RM9.65bil as compensation to the four companies still stood and they had until March 10 to revert.
"A special purpose vehicle company will be set up under the state-owned Kumpulan Darul Ehsan Berhad to manage the water supply industry.
"The compensation offer starts now and we hope to get the reply from the concessionaires in two weeks," he said.
Khalid assured staff of the four companies that they would be retained, saying the takeover only involved the acquisition of their equities.
Dr Ongkili said tenders for various jobs in Langat 2 would be awarded soon.
"We think the construction work can begin within 30 days with the entire project taking three years to complete."
Asked whether the current water crisis had prompted both parties to speed up the restructuring exercise, Dr Ongkili said they had been discussing the issue since last year.
"We have worked hard for more than seven months to reach a consensus and hope water concessionaires in the state will give full cooperation to ensure the success of the restructuring initiative," he said.