The Water-play Hots Up!

If things move as planned, an international tender for the Pahang-Selangor Raw Water Transfer Project (PSW) will be called as early as in August 2007. Tokyo Electric Power Services Company, the project consultant is at the pre-qualification stage and its report is due within 10 days. The Ministry of Energy, Water and Communications expect construction to begin early 2008.

The whole project cost is yet unknown but the estimated cost for the Pahang parcel may be in the region of RM3 billion and the Selangor package; RM9 billion. It is also unclear at the moment whether the tenders will be called at one go or parceled out. The entire project involves the construction of the 45 km tunnel,intake and pump system and the pipelines.

There is a loan for this project from the Japan Bank for International Cooperation(JBIC) amounting to RM2.41 billion which carries a loan interest of 0.95%. It was signed with the Malaysian Government way back in 2005. Payback period is 40 years and the condition for drawdown-do the pre-qualification quickly and call the project tender. The loan can be used to pay for the building of the tunnel, the dam and related works as well as consulting services which will include detailed design and implementation supervision.

Apart from the PSW, on 5th July, Zecon told Bursa that it has won the RM125 million raw water transfer project in Negeri Sembilan. Also, a bank-backed brokerage recently released its report citing serious water shortage by 2011 if authorities do not address water projects now. All this add fuel to the waterplay.

But that is not all that is in store for the water-play. In the state government coffers, billions of ringgits are about to be released for re-piping projects.This is huge!

As such parties such as KPS, Puncak Niaga, Zecon, JAKS,Ranhill Utilities, Taliworks and Gamuda seems to be in position to take a fair bit of these projects. The pipe makers will also have their share of the cake in the supply of pipes. Engtex, YLI, JAKS and Hiap Teck should benefit.

I believe the week beginning 9th July will see the waterplay theme being played out on Bursa. Are you currently holding any of these stocks?

Heartsong