27 June 2012
Puncak Niaga's 70% owned SYABAS suffers acute cash flow problem as a result from non-revision of water tariff rates starting from January 2009
The annual general meeting (AGM) of Puncak Niaga Holdings Bhd turned into a raucous affair as individuals claiming to be minority shareholders of the company carried placards urging the company to seek legal action to reclaim monies owned to it.
Speaking to the media after the three-hour long AGM, executive chairman Tan Sri Rozali Ismail said shareholders had asked Puncak Niaga to take legal action against its 70%-owned subsidiary, Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), to claim an outstanding debt of RM1.09bil.
“All this while, we did not take any action as Syabas is majority owned by Puncak Niaga. But now we will be considering the options that had been suggested by the shareholders,” he said.
He said the matter would be brought up in Puncak Niaga's board meeting next week and would also be discussed with the group's lawyers.
“We respect the request from the minority shareholders who have been hoping to get their dividends, and this should be given consideration and we should take the next course of action,” he added.
Besides still owing an outstanding RM1.09bil to Puncak Niaga, Syabas also owes monies to two other water-treatment operators, namely Syarikat Pengeluar Air Sungai Selangor Sdn Bhd and Konsortium Abass Sdn Bhd.
The debt was accumulated as a result from the non-revision of water tariff rates starting from January 2009, which resulted in Syabas suffering from acute cash-flow problems that affected its ability to make full payment for water purchases from the three water-treatment operators.
Syabas was set up to undertake the privatisation of water-supply services in Selangor, Kuala Lumpur and Putrajaya. However, it is now entangled in a stalemate over the transfer of the state's water assets that has been ongoing since 2008.
Puncak Niaga and Syabas have been part of a tussle between the State and Federal Governments, with the State Government pressing to buy over Syabas in a bid to restructure it, before allowing it to be federalised under the Water Services Industry Act 2006.
To recap, Puncak Niaga owns 70% of Syabas while 15% is held by Kumpulan Darul Ehsan Bhd and the remaining 15% by Kumpulan Perangsang Selangor Bhd. The Federal Government, through the Minister of Finance Inc, holds one golden share in Syabas.
In its annual report, Puncak Niaga said the Government's decision to freeze the Syabas Capital Expenditure programme in July 2008 pending the restructuring in the water services sector in Selangor, Kuala Lumpur and Putrajaya had crippled its plans to refurbish, rehabilitate and enhance water distribution infrastructure.
Rozali said he hoped the deadlock could be resolved as soon as possible by the relevant parties.
“We don't want to repeat the water crisis that happened in 1998. There is always a solution for every problem. We need to talk and make sure that we can achieve a win-win solution. However, this is the difficult part to achieve,” he said.
He also said the company would be presenting a few suggestions to the National Water Services Commission (SPAN) to tackle a water crisis should it happened.
“We should know how to handle this and help consumers if there is a prolonged draught. We will be meeting up with SPAN to discuss ways to solve this issue on a short-term and also a longer-term basis,” he said.
Meanwhile, G. Parameswaran, who was representing the minority shareholders of Puncak Niaga, said should the chairman and board of Puncak Niaga choose to not take any action against Syabas, the minority shareholders would instead sue Syabas to protect their rights.
“For this, we will approach the other minority shareholders of Puncak Niaga and garner their support to requisite the board of Puncak Niaga to convene an EGM to approve the shareholders' resolution to empower Puncak Niaga to sue Syabas for the outstanding amount,” he said in a statement yesterday.
For its financial year ended Dec 31, 2011, Puncak Niaga recorded a net loss of RM83.72mil on revenue of RM2.59bil.