What’s actually happening in Syabas?,

Syabas is a private limited company with a capital of RM100 million. It’s main purpose of existence is to distribute clean water or treatment water to almost 7 million people in Selangor, Federal Territory and Putra Jaya.

According to the financial notes, its current liability is RM2.38 billion, and current asset at RM1.7 billion. Thus, it has a debt amounting to about RM700 million.

The major shareholder of  Syabas is Puncak Niaga Holdings Sdn Bhd,  owned by Tan Sri Razali Ismail. He is known as the treasurer of UMNO Selangor.

What Syabas does? According to Syabas website, the jobs they do are as follows:-

SYABAS operates and maintains:

A stretch of 24,604km water pipes that are made of mild steel, ductile iron, asbestos cement, HDPE, uPVC and cast iron ranging from 100mm to 2200mm diameter
1226 service reservoirs, tower reservoirs, and suction tanks>
444 booster pump stations
53,878 valves ranging from 100mm to 2200mm

Syabas responsibilities include supplying uninterrupted quality clean water to consumers. Apart from that, SYABAS performs periodical and regular maintenance of infrastructure and water-related assets, replacing aging pipes and water meters, offers excellent customer service, provides convenient payment methods to consumers and promotes consumer awareness on water-related issues to ensure the standard quality of life is sustained. SYABAS had to carry out a number of tasks when it took over the management of water supply of the state through the privatization process, which includes:

Assisting the State Government by taking over PUAS debts to the water treatment operators amounting to RM 2.4 billion;
To reduce high rate of Non Revenue Water which in January 2005 stood at 42.78%;
Replacement of at least 6,000 km of old pipes that needed replacement;
Cleaning of 1,100 reservoirs;
Investigating and assisting the authorities to prosecute water theft activities amounting to 6,000 cases recorded;
Improving existing poor customer service which had resulted in the loss of confidence to lodge reports to PUAS Berhad;
Collecting and digitising of main trunks, pipes and reservoirs which were non existence when SYABAS first took over. That is why during PUAS time the replacements of old and faulty assets were like groping in the dark;
In terms of supply, there is only about 8% of water reserve left for consumers’ usage which are not all fully distributable because of the poor pipeline interconnection to demand areas;
Uncollected bills amounting to lion have to be collected.

As informed publicly Syabas has failed to receive approvals from PUAS and Span in proposed expenditures of about RM2.04 billion which were instead given to do away with only RM330 million in 2005 – 2008 period and RM190 million in 2009 to 2010 period. In other words, Syabas couldn’t decrease the ratio of NRW greatly due to defective distribution pipelines or theirs appliances.

As a company that is profit motivated expenditures must be made with a reasonable return to cover both cost and profit, however, when prompt for an increase in water tariff for the improvement the state government who is also part of the Syabas by 30% refused to do so.

Water is categorized a utility project which by normal standard is provided free by the government, except for the cost of distribution. Before privatization the state water distribution was hold by a government department of which it had provided the government a revenue of hefty profit of RM50 million a year. As population has increased over the year to almost 7.5 million people, the Klang Valley water distribution becomes an enormous task for any distribution company.

Another point is that Syabas also needs to pay the treatment water for distribution from a company which is operating the treatment plants. Although the company which is operated by own subsidiary, Puncak Niaga Sdn Bhd, delay in collection for the distributed of treated water from users would force Syabas delaying payments to its subsidiary. Today as we were informed, payment for treated water was at about 40% of billing. Thus as informed Syabas has a large amount of debt, furthermore cost for repairs and NRW has reduced its income.

The state government however has a view of incompetency on the part of Syabas management which include their own staff. We are of the view however, cost of running the water asset is huge thus a lesser budget expenditure would certainly distribute to higher NRW.

Who is at fault when Selangor in the fringe of losing its water supply. Today the federal government has rejected Syabas’s request in water rationing and a whole holistic view is being undertaken to resolve the issue. Many analysts believe however the state government is using this issue as a political issue. The state is of the view that Syabas is a political vehicle of UMNO and the main issue brought up against Syabas is the CEO’s and key staff pay and salary which is unacceptable and waste of public fund.

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