The water industry restructuring in Selangor is stalled due to the state government's refusal to resolve three of the eight conditions in the master agreement with the federal government, thus prolonging the water supply crisis in the state.

Energy, Green Technology and Water Minister, Datuk Seri Maximus Ongkili said the conditions included that for Pengurusan Air Selangor Sdn Bhd (Air Selangor) to finalise its list of assets to the enable the individual facility licence to be issued to Air Selangor under Act 655.

He said Air Selangor had also not resolved the transfer of assets ownership to Pengurusan Aset Air Berhad (PAAB) to enable PAAB to provide an allocation of RM1.68 billion to assist Air Selangor to bear the cost of taking over the water concessionaires' liabilities amounting to RM7.65 billion.

Ongkili was replying to a question from Azmin Ali (PKR-Gombak) in the Dewan Rakyat today on the federal government's commitment to implementing the Selangor Water Restructuring Master Agreement, which has been stalled.

Ongkili said although the master agreement had been signed, it had not taken effect as there were conditions precedent (CPs) that had not been met.

"Therefore, the statement by the Honourable Member from Gombak (Azmin), claiming that the federal government has reneged on the agreement was wrong and could confuse the public," he said.

Ongkili said the federal government had asked to extend the grace period of meeting the CPS three times, with the third extension expiring yesterday, and it wanted further extension.

However, he said, the federal government regretted when Azmin as Selangor Menteri Besar, issued a media statement that the state government did not intend to extend the master agreement anymore.

On the implementation of the Langat 2 Water Treatment Plant project and its distribution system (LRAL2), Ongkili said that up to Feb 25, it was at 1.18 per cent compared to the schedule set at 3.43 per cent.

"I have been informed that the delay is due to the Selangor government instructing the agency and local authority involved to defer approval and issuing of permits to build the plant until the state's water supply
restructuring is finalised."

He stressed that the federal government was committed to the Selangor water supply services restructuring as this would have an impact on the people and the state's economic development.

During the question-and-answer session, the atmosphere in the House got heated up when Azmin stood up and questioned the federal government's claim for transfer of ownership of land to make way for the water pipes.

He said the state government was prepared to honour the master agreement signed but found the action for the transfer of land ownership to be against the principles and spirit of the agreement.

"Is the federal government trying to take away the state's sovereignty by taking over the land? This land is for placing the water pipes, so why the need for transfer of land ownership," he said, followed by a lengthy heated argument between the two sides.

Dewan Rakyat Speaker Tan Sri Pandikar Amin Mulia then advised Ongkili and Azmin to discuss the matter at a another place that was more conducive to resolve any misunderstanding, due to the limited time to do so in the House.

In a statement issued today, Azmin claimed the federal government's refusal to honour the principles and spirit of the master agreement had resulted in the Selangor water industry restructuring not being implemented and the agreement to lapse.

He said the issues involved recognition of the state's water assets amounting to RM14.9 billion to be injected into Air Selangor, and acceptance of the transfer of RM2 billion from Air Selangor's water assets for the purpose of financing the taking over of all the water concessionaires in Selangor.

Another issue is the issuing of facility licence to Air Selangor as recognition of ownership of the balance of water supply owned by the entity.

Azmin claimed the federal government also did not honour the leasing and facility licence approval agreement reached between PAAB and Air Selangor for the lease of water assets which were to be transferred to PAAB.

He said if the federal government did not make claims that were in conflict with the spirit of the master agreement, the state government was prepared to discuss and reach a consensus in the interest of all water consumers in Selangor, Kuala Lumpur Putrajaya.

Delayed implementation of the master agreement could adversly affect the building of Langat 2, the first phase of which is expected to be ready by 2017, to provide clean water supply to consumers.