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The RM375 million Syabas  pipe replacement project in Klang Valley should be suspended pending full investigation whether Syabas has violated  the 30-year Selangor/KL/Putrajaya water privatization concession and the breach serious enough to nullify the concession

Media Statement
by Lim Kit Siang

(Parliament, Tuesday): Yesterday, the  Minister for Energy, Water and Communication Datuk Seri Dr. Lim Keng Yaik said Syarikat Bekalan Air Selangor Sdn. Bhd (Syabas) has breached the Selangor water privatization concession by using imported pipes from Indonesia for its RM375 million pipe replacement project in the Klang Valley instead of sourcing them locally.

Producing several photographs taken by his “spies” as proof that Syabas had used pipes manufactured by an Indonesian company, PT Growth,  Lim demanded for transparency.

Keng Yaik  questioned Syabas’ move in appointing a local company to procure the pipes when a special committee comprising officials from his ministry and the Finance Ministry had yet to approve the tender.

Saying that “something is very wrong”, Keng Yaik said that the Federal Government has given a RM250 million grant to Syabas to replace the pipes.

He said the Finance Ministry has written to Syabas on May 20 this year, acting on a complaint from the Federation of Malaysian Manufacturers that Syabas was not using local material for the replacement exercise.

This was followed up by a letter on May 30 from his Ministry to Syabas reminding them of the concession agreement requirement.

A Ministry of Finance circular issued in 2000 stipulates that all government-funded contracts should be carried out by open tender and approved by the Government, and must include local material and manpower.

What Keng Yaik revealed about the Selangor water privatization exercise of December 17, 2004, the biggest water supply privatization project in the country and the first privatization project under the premiership of Datuk Seri Abdullah Ahmad Badawi, is most shocking, another reminder to Malaysians that in privatizations, public  interests, whether of consumers or about transparency and accountability, rank very low when compared to profit margins of the successful concessionaire.

There are two things that must be done immediately:

  • Firstly, the 30-year Syabas Selangor water privatization concession should be made public to ensure accountability and transparency as it has produced a can of worms in its first six months.
     

  • Secondly, the RM375 million Syabas  pipe replacement project in Klang Valley should be suspended pending full investigation whether Syabas has violated   the 30-year Selangor/KL/Putrajaya water privatization concession and the breach serious enough to nullify the concession.

There are many questions that cry out for answer, but I will pose three

  • Has the government paid out the RM250  million grant for pipe-replacement to Syabas?:
     

  • Why the Finance Ministry  and the Energy, Water and Communications Ministry had allowed Syabas to award the tender to a particular company without first getting approval from a special committee comprising official from the two Ministries as the money comes from the Government?  Could the government credibly claim ignorance that such a tender had been awarded and work started when Syabas had taken out full-page advertisements in national newspapers?
     

  • Why Syabas was allowed to flout the open tender requirement by manipulating its outcome.  A day before the tender closed on April 26, 2004, Syabas sent to all tenderers the new stipulation nominating two companies as obligatory suppliers for pipes and fittings, namely: Laksana Wibawa Sdn. Bhd (for supply of mild steel, ductile iron pipes and fittings) and Musa & Rahman Plastic Industries Sdn. Bhd. (for supply of high density polyethylene (HDPE) pipes and fitting.

Both these nominated companies are not only relatively unknown, they raise  disturbing questions  about the propriety of such last-minute distortion of the tender process by stipulating nominated companies to be the suppliers, conflict-of-interest  and the background of the nominated companies, as Laksana Wibawa, Puncak Niaga and Syabas are believed to have a common factor in Tan Sri Dr. Rozali Ismail, who is executive chairman of both Syabas and Puncak Niaga.

I am extending an invitation to Rozali Ismail or his representative, whether Syabas, Puncak Niaga or Laksana Wibawa to the parliamentary roundtable on water services in Parliament (Committee Room 2) on Friday at 10 a.m.   I have also today written to Keng Yaik to remind him of the invitation to the parliamentary roundtable on water on Friday, as he had indicated that he or his representative would attend

(07/06/2005)      

                                                       

*  Lim Kit Siang, Parliamentary Opposition Leader, MP for Ipoh Timur & DAP Central Policy and Strategic Planning Commission Chairman