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Wednesday, May 30, 2007

Water Companies Must Remain Public

Water is an essential resource and if water supply services have been privatised, the authorities must ensure that the government retains control of such companies via the "Golden" share arrangement.

The Johor supply company went public with great fanfare about 6 years ago and since then not even one sen has been paid in dividends and within 3 years of the listing, parties acting in concert including the promoter of the public issue made a general offer for the company.

Except for a brief period after the IPO the share has been below the initial price even though the profits of the company have been within expectations. SAJ is one of the profitable water companies in Malaysia.

I believe the concept of making such companies go public is good but the "Golden" share will ensure that a company providing such a strategic service should not be allowed to be taken private again.

In fact companies such as TNB, TMB and the water companies should have a special clause that they will remain a PLC for at least 50 years after listing.

Photo: Thanks to http://www.cuti.com.my/Sub/Selangor/selangor_sungai_gabai_waterfalls2.jpg

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