Since Mahathir took over the rein of Malaysia, we have seen numerous cases of mismanagement of public money such as privatizing profits and socializing losses essentially they make the mistakes and we the public bear the losses. It still is happening and if they remain in power, it will continue to happen again in the future. Witness the recent buying purchasing of Syabas’s devalued bonds from bond holders at a hefty 75% over its current value and essentially dashing the hope of Pakatan Rakyat’s Selangor hope of taking over Selangor water assets and making water less expensive.
Article below,: Water debt: Putrajaya overpaying by 73%
Water debt: 'Putrajaya overpaying by 73%'
May 27, 11 2:15pm
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The DAP has condemned the federal government's decision to acquire the downgraded bonds issued by Selangor water concessionaires at a price 73.2 percent higher than the market value, calling it “outrageous and an abuse of taxpayers' monies”.
“It is inexplicable that the government has decided to settle the outstanding bonds of these privatised water companies when the shareholders of these companies themselves should be responsible for their own debt,” said DAP national publicity secretary Tony Pua.
It was reported earlier that the federal government-owned Pengurusan Aset Air Bhd (PAAB) had set up Acqua SPV Bhd to buy over the bonds which have been heavily downgraded by the rating agencies.
This is because all four Selangor water concessionaires - Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Puncak Niaga Sdn Bhd (PNSB), Syarikat Pengeluaran Air Sungai Selangor Sdn Bhd (Splash) and Konsortium ABASS - are unable to pay their bondholders.
Media had reported that Acqua SPV will offer to take over the bonds for RM6.5 billion, against the issued value of RM9.02 billion.
However, according to a report published by The Edge Financial Daily on Wednesday, the offer price is at RM94.49 against the market value of only RM54.54 at the end of last month, which Pua claimed is 73.2 percent higher than the market value.
He pointed out that the water concessionaires had declared handsome dividends for their shareholders when they raked in profits.
Among the concessionaires, Splash, whose parent company is Gamuda Bhd, declared dividends of RM578.6 million in 2007 while PNSB had declared dividends amounting to RM214 million between 2006 and 2010.
'Privatising profits and socialising losses'
“The above certainly makes true the dictum of the BN government privatising profits and socialising losses by taking over the debt burden of these companies,” he said in a statement released today.
Maintaining the takeover as a'bailout', Pua (left) said it is reminiscent of the Malaysian Airlines System (MAS) bailout when the federal government paid RM8.00 per share, or 121 percent higher than the market price of RM3.62 per share, to Naluri Bhd, owned by Tajuddin Ramli in December 2000.
“In fact, the government has yet to see any returns on its 'investment' for the stock price has slumped to RM1.59 (as at yesterday) or an 80.1 percent decline for its investment after 10 years,” he said.
Pua also urged Energy, Water and Green Technology Minister Peter Chin to be transparent in handling the takeover.
“To date, we still do not know how the federal government plans to restructure the water industry in Selangor based on the Water Services Industry Act 2006 after taking over these debts, and whether these private concessionaires would be required to repay the government for the bailout.”
Yesterday Chin had denied that the takeover is a bailout and said that there has been no cabinet decision on the matter earlier this week.
“The minister must no longer pretend to be clueless about the entire exercise and disclose the full terms of the bailout exercise as this affects the basic right to water of all residents in Selangor, Kuala Lumpur and Putrajaya as well as billions of ringgit of tax-payer's monies.
“Unless of course, he is completely powerless in his own ministry, with key decisions made without his knowledge; in which case, he should then just resign honourably to protect his personal reputation and integrity,” Pua added.
According to Chin, the bid for the bonds was a mitigation attempt to stabilise Selangor's water services industry and avoid negatively affecting the capital market.
“I wish to stress that the takeover does not mean Selangor water companies who issued the bonds are released from their obligations to pay back their liabilities prior to the takeover by Acqua SPV.
“Thus if the Acqua SPV's bid is successful, the takeover should be looked at as a change in investors from current bondholders to only Acqua SPV,” Chin said.