Water - Roundtable meeting around the corner

Sector Update

Water - Roundtable meeting around the corner

The recent award of tunnelling work (Lot 1-1) in the Pahang-Selangor Water Transfer (PSWT) project to Shimizu consortium has emerged as a catalyst for the Malaysia water sector. Other counterparts, Nishimatsu, IJM Corp and UEM Builders hold 30%, 20% and 20% stake in the consortium, respectively.

· The tunnelling works being the blueprint for PSWT. This is a crucial piece in the PSWT project universe as it will bring the spill over effect to the overall project and the water industry itself. The tunnelling work includes construction of a 45km- long tunnel from Semantan intake / reservoir in Pahang to the future water treatment plant in Langat, Selangor. The contract sum is estimated at RM1.3b. There will be two pipelines with diameter size of 3m to connect the Kelau Dam to the Semantan pipeline. The project tender is expected to be awarded to local pipes manufacturers and contractors in the near term. Apart from the Pahang tunnelling side, the Semantan pipeline (12km) will be the immediate catalyst for the water industry.

· Langat II project award another leg up for the industry. The tender for the project is likely to take place late this year. It is pretty much anticipated in the market that the tender of Langat II project (Lot1-2) will be out in the near term possibly in the 3Q09. Nevertheless, we opined that the award of the project will only be announced early next year (2010) whilst the tunnelling work will be ready in the next 5 years. This will benefit the water related companies which have the capability and proven track record in the previous water projects. Langat II project is under the purview of PAAB or WAMCO (Water Asset Management Company) – wholly owned by Ministry of Finance authority (MOF).

· Selangor water restructuring chronicles continue as the roundtable meeting is around the corner. The new date set up by the new Minister in Ministry of Energy, Green Technology and Water (MEGW) to unravel the issue by end of June 2006. Currently, the Selangor water concessionaires are in the midst of negotiations with the Selangor state, federal and PAAB through several meetings this week and next week. The end-June 09 dateline is seen to be imminent at this juncture.