Tuesday, October 1, 2013

Puncak Niaga's background

Among the four water concessionaires in Selangor, Puncak Niaga is the largest.

Although Puncak Niaga has remained status quo on the takeover of its water assets by the state government, talk is rife that both parties are on talking terms to come to an amicable solution.

Puncak Niaga started its water treatment business in Selangor in the 1990s. The company widened its role in 2004 when it was awarded a 30-year concession to manage Syabas.

The agreement was signed by the federal and Selangor state governments. The two other companies with concessions to supply treated water to Syabas are Konsortium Abass and Splash.

The other major water player in Selangor, apart from Puncak Niaga, is KDEB, which holds a stake in various water assets via its 61%-owned Kumpulan Perangsang Selangor (KPS).

KPS has a 55% stake in Konsortium Abass, 30% in Splash, 30% in Syabas and 20% in Taliworks Corp Bhd, another player in the Selangor water sector.

Splash also has Gamuda Bhd as a 40% shareholder, while the remaining 30% stake is held by The Sweetwater Alliance Sdn Bhd.

And although federal government vehicle PAAB is responsible for facilitating the consolidation of water assets in the respective states, in the case of Selangor, the mandate had been placed on KDEB in February 2008.

If the takeover happens, a source at Puncak says that the company has over the years been investing in the latest technology in the water business and that can be replicated elsewhere in the region.

The sale of Puncak Niaga’s water assets will unlock the value of its assets into cash, free the company from high receivables from Syabas amounting to RM2bil and provide the company with a stronger financial footing to expand.

In mid-2008, Puncak Niaga entered the China market via its 80%-owned subsidiary Sino Water Pte Ltd, a company incorporated in Singapore which focuses primarily on potential markets in China. Puncak Niaga later increased its stake in Sino Water to 98.65%.

Sino Water has established various subsidiaries in China to undertake potable water and wastewater projects in several provinces there.

For Asean countries, Puncak Niaga has formed a wholly-owned Singapore subsidiary, Puncak Niaga Overseas Capital Pte Ltd, which will spearhead its entry into Vietnam, Cambodia and Laos.

Apart from expanding its expertise in the water services sector, the source says Puncak Niaga is also very interested in expanding its O&G business. It has the expertise in the O&G fracking process that requires very high water pressures. In the longer run, Puncak Niaga also has the aspiration to be involved in the exploration and production of oil.

At the end of 2012, the company’s O&G subsidiary, GOM Resources, had a positive impact on the group’s overall results, contributing 20.8% to the group’s revenue.

At present (Sept 2013), Puncak Niaga’s O&G capabilities involve construction and subsea services and marine support services to the offshore services segment.

However, the unit is exploring many other areas, both mid-stream and upstream, and is looking to expand locally and overseas.

In 2012, GOM Resources set up the exploration and production division to evaluate business development opportunities, both locally and overseas.

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