Selangor water saga: Deal likely by year end

MALAYSIA - A solution to the deadlock over Selangor's water supply between Malaysia's federal government and Selangor state may be possible by the year end, Selangor Menteri Besar Khalid Ibrahim said on Wednesday.

He said the two sides have narrowed their differences on how to restructure four water firms, a saga that has dragged on over five years, with dozens of episodes of dry taps and irate consumers.

"I think it is within the framework of the state," Tan Sri Khalid said when asked if the two parties could make a deal by the end of the year. He was speaking to reporters after chairing a weekly meeting of his state Cabinet.

The federal minister in charge of water, Datuk Seri Maximus Ongkili, indicated last week that negotiations could be wrapped up within three months, a signal both sides are willing finally to deal. Without an agreement, tap water could be rationed as early as next year in Malaysia's commercial and industrial heartland, federal officials have said.

Often called the Klang Valley, that heartland encompasses Kuala Lumpur, Petaling Jaya, Putrajaya, Shah Alam and their surrounding districts, home to some 7.5 million - a fifth of Malaysia's population. In 1998, a regional drought led to months of severe rationing in the Klang Valley, spooking investors and angering Malaysians.

Klang Valley's water assets are operated by four water firms jointly owned by the federal government and Selangor state. They include water collection from rivers and dams in Selangor, 29 treatment plants, 26,000km of distribution pipes and 1,500 reservoirs.

This was not an issue when both the federal government and Selangor state were ruled by Barisan Nasional (BN). But in 2008, the opposition Pakatan Rakyat (PR) unexpectedly won Selangor.

The stakes in the four firms are now divided between PR's Selangor state and the BN federal government. To complicate matters, Puncak Niaga, the biggest of the four companies, is controlled by Tan Sri Rozali Ismail, the former treasurer of Umno Selangor.

Umno is the linchpin of the BN. Federal officials insisted the four companies be sold to the central government so a new RM3.8 billion (S$1.5 billion) water treatment plant could be built to avert a repeat of the 1998 water crisis. But Selangor's government wanted to take over the four firms. It has been a stalemate since.

Selangor residents are pleading for a quick resolution. "Someone should back down for our sake," said housewife Jamilah Sidek, who lives in Ampang Jaya on the outskirts of Kuala Lumpur.

Who controls water assets

Water resources in Kuala Lumpur and Selangor state are controlled by four water firms. Their shareholders include the Selangor government, with golden shares held by the federal government and federal investment agencies.

The four are Konsortium Abass, Syarikat Pengeluaran Air Selangor (Splash), Puncak Niaga and Syarikat Bekalan Air Selangor (Syabas). Generally, Abass and Splash are in charge of raw water collection and supply from rivers and dams for the Klang Valley.

Puncak Niaga treats the water at 29 plants. Syabas distributes the water and takes care of expansion and maintenance of 26,000km of pipes and 1,500 reservoirs.

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