Thursday, June 2, 2011

Water Deal - Surrender of the State's Rights

The water deal between Penang Water Supply Corporation (PBAPP) and Pengurusan Aset Air Berhad (PAAB) will have far-reaching implications for water in Penang. The deal obligates PBAPP to migrate its core asset to PAAB in exchange for a complete restructuring exercise of the outstanding federal loans owed by the state. By signing the deal, Lim Guan Eng not only give away the prime assets of PBAPP to PAAB, he also virtually surrender the state rights to develop water supply resources to the Federal Government.

The deal is negotiated in total secrecy without refering to the state legislation for any debate or collaboration. When Lim Guan Eng was asked about the rational of signing the deal, Lim as usual blame the previous state government for agreeing to the deal. Lim said the Penang state government was initially reluctant to accede to the migration of the state's water assets to the PAAB under the federal government.

“However as chairman of Perbadanan Bekalan Air Pulau Pinang, I had no
choice but to find a solution as the previous state government had agreed to
surrender the state's water assets to the federal government under the Water
Services Industry Act 2006" said Lim.

The previous state government may have agree to surrender the state water assets to the Federal Government, but the decision of the previous state government has no legal binding as no agreement was signed. Now Lim Guan Eng claimed that the signing of the agreement is his alternative solution when he actually happily give in to the request of the Federal Government without serious consideration of the far reaching implication. Why should Penangites voted for change or alternative state government, if the Penang Chief Minister has no say in the decision of the previous state government?

While borrowing through the federal government and surrendering our rights to develop water resources certainly guarantees access by the state governments to long-term finance, past experience suggests that the allocation of credit through this manner especially may eventually get embroiled in a political process. Under such conditions, capital does not necessarily flow to the most productive, but those who are politically the most astute, with the result that government borrowing is inefficient and subsequent investments are unproductive.

The restructuring of the federal loan at zero interest is not tantamount to loan payment exemption. To secure the RM1.2 billion loan for Mengkuang dam expansion, Lim Guan Eng has willingly give away the prime assets of PBAPP and our rights to develop water resources and denied Penang the future earning on water resources projects. All Lim Guan Eng want is money and development but is it beneficial to Penangites?

The increasing federalisation of state resources will deny the opposition held states the opportunity to have fair and equal development . This concentration of power is worrisome, especially because there is at present no coherent policy about which how development funds should be allocated back to the the various state governments. With the water resources assets under the control of PBAPP, the state government has more influence in formulating and implementing policies; a great deal of discretion in decision making and more relevant to diverse interests in society.

Why such an important issue is not refer to the state legislature for debate? Did Lim Guan Eng ever consult with his PR counter parts or Anwar Ibrahim on the water deal ? Will Selangor state government follow the same foot path or go the other way? When Teng Hock Nam revealed the deal before the formal announcement in order to give credit to BN for allocating developemnt fund for Mengkuang Dam expansion, Lim was furious and reprimanded Teng for revealing state's secret. When did a water deal become a national secret?

Why Lim Guan Eng choose to make executive decision without refering to public opinion on the issue. This is the most egregious examples of a disturbing trend - bypassing the people on important decision making in the name of competency, accountability and transparency.

Why should we surrender the state's rights to develop water resources and the state's water assets to PAAB? The PBAPP is one of the highly reputatable public entity in Malaysia in term of efficiency and management. PBAPP is not a money losing entity, it's ability to perform is beyond question. If we can't trust PBAPP on the development of the state water's utilities, who should we trust? Decisions about public expenditure that are made by PBAPP will be closer and more responsive to a local constituency and are more likely to reflect the demand for local services than decisions made by PAAB . By depriving PBAPP the involvement in decision making process for the delivery of water resources services, how is Lim Guan Eng going to ensure that the federal government will not discriminate against Penang after assuming control over the water resources development.
Should we just say no to change and vote for BN since Lim Guan Eng like to choose the easiest path and refuse to face challenges in governing the state?

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