Two parties bid to take over IWK

29/09/2003 The Sun

KUALA LUMPUR: The government has received proposals from two parties on the privatisation of Indah Water Konsortium Sdn Bhd (IWK), the company responsible for operating and managing the public sewerage system.

Sources say one of the proposals is from Puas Emas Utilities Sdn Bhd, a private company linked to Datuk Kenneth Eswaran of Multi Vest Resources. Parties linked to the present management of IWK are believed to have forwarded the second proposal.

Both parties are believed to have presented their proposals to the government two weeks ago

outlining the proposed tariff structure, capital expenditure and required changes in the legislation.

IWK chief executive officer Suhaimi Kamaral zaman, when contacted, denied that the existing management is involved in any management buy out or take over of IWK.

Sources say Puas Emas Utilities is proposing to repay all government loans and other forms of financial assistance, amounting to RM1.8 billion, that has been advanced to IWK so far.

It is seeking an initial tariff hike of 30% to be implemented in 2006 but capped at 100% over the concession period of 30 years.

This means the maximum tariff for a household with a connected septic tank will be a maximum of RM16 from the present RM8 by 2036.

Puas Emas Utilities is proposing to inject RM3 billion into IWK for future capital expenditure, sources say. This, however, requires the authorities to introduce legislation that will compel households and owners of commercial units to pay their IWK bills.

Sources say the second party presented two alternatives. The first called for the government to take over all the assets and liabilities of IWK while the company will under take the operations and management. It is similar to the corporate retructuring of Malaysia Airlines.

The proposal also seeks a RM4 billion government subsidy for future capital expenditure and an initial tariff hike of 43.8% in 2005 followed by more hikes in future as determined by the government.

The alternative proposal by the second party seeks a soft loan of RM13.25 billion from the government. An initial tariff hike of 46% is proposed in 2005 followed by more increases over the concession years.
IWK is among the failed privatisation projects in the country .

It was privatised in December 1993 to take over the sewerage system that was administered by the local authorities throughout the country.

IWK imposes tariffs that-range from RM6 per household that has an unconnected septic tank to a few thousand ringgit for a commercial block.

The original shareholders of IWK were West Water Sdn Bhd, Berjaya Industrial (which became Rekapacific), Koperasi Polis di Raja, Lembaga Tabung Angkatan Tentera and Aims Worldwide (M) Sdn Bhd.