Thursday, July 29, 2010

Penang in Decline : Perbadanan Bekalan Air Pulau Pinang (PBAPP): Guan Eng's Hidden Watery Grave (Part 1)

It is clear why Lim Guan Eng has launched a verbal onslaught against the the federal appointed, SDO. The timing couldnt be more perfect. After dillydallying with the PBA 2009 annual report and accounts (finally released last Wednesday), LGE must be fretting that the can of worms it was harbouring might be levered open. Hence, the firststrike mechanism was activated and a diversionary strategem deployed.

To put it mildly, the report makes abysmal reading. It is also a damning indictment of LGE and Co's much vaunted management skills. The report is replete with instances of wastage, inefficiencies and downright incompetence that has reduced a once wellrun state outfit (the envy of many) to a pathetic state. There is hardly anything redeeming in those figures save for fat increases in the BOD's allowances.

This post will inevitably be misconstrued as a Pakatan bashing exercise crafted by a paid lackey and initiated at the behest of UMNO. Sadly, that will be the assumption of PR fanatics but nothing could be further from the truth. I trust the 2600+ exclusive readers of this blog to read this piece dispassionately and arrive at an unbiased conclusion. They can take it with a pinch of salt and a touch of vinegar before tarrying over to the links provided to floss away the bitter aftertaste of a character assasination if they deem this to be one. After all, change should be for the better, a step up in the scheme of things. But if that much lauded change is in the reverse direction, then it would be better if there is no change at all. For stasis would be bliss anytime anywhere if the alternative is a slippery slide into collective insolvency.

It may not be apparent to many people in Penang but beneath the floorboards of public deceit, there lies a private watery grave. A grave that is getting ever bigger by the year through which the innards of one Penang's hitherto wellmanaged state asset is being bled dry, the sacrificial cash cow butchered on the altar of politics and poor management.

Slowly but surely,Perbadanan Bekalan Air Pulau Pinang is being drowned by management ineptitude, weak leadership and a lack of intellectual nous. The saga of PBA's decline and probably eventual demise commences at its moment of apogee sometime in April 2008, a tale that has taken a life of its own and selfaccelerating towards it eventual suicide.

A snapshot of PBA's grandiose past and its shabby present will illustrate how a tsunami of idle chatter can easily swamp levees built through years of hard work. No! this has nothing to with SDO vs CM, a freakshow so obtusely conceived that even a little boy will shake his head in disgust at the sight of 2 grownups going hammer and thong at each other's jugular. A CM, yeah you read that right for ever since he ascended the throne, he had taken umbrage at all and sundry except his own derriere for Penang's current misery.

Let the unassailable facts inundating PBA voice their tale of horror:

In 2007, the last calender year KTK was at the helm, this is what PBA's finances looked like :

Fast forward to 2009, and one is struck by how quickly, a once thriving entity on the cusp of more glory has instead descended into a deep cesspool.

Everything has been completely submerged in 2 short years and PBA is on the road to insolvency if this keeps up for another 3. Generally, there has been a drop in all key areas: revenue, PBT, PAT, EPS. You name it and Guan Eng and co has confounded market expectations by achieving it. To top it all, there has been other superduper achievements as well: lower Cash and Cash equivalents, higher operational costs, increased loss from NRW. A brief peek at the 2007 numbers and that of 2009 will be enlightening indeed:

C & CE is dropping at an average annual attrition rate of approxiamtely 20 million per annum and come 2013, only an empty till will welcome the new BODs.

2007 : Rm 108.858 million
2008 : RM 80.164 million
2009: RM62.067 million

and C & CE holdings in interest yielding FDs have deteriorated by 50% from RM 104.4 million in 2007 to RM52million by 2009.
Profit Before Tax (PBT) has sunk like a headstone into the Air Itam mere, awaiting to be fished out like a dead corpse in the not too distant future. Guan Eng's lame excuse of increased operating costs vis-a-vis static tarriff rates does not cut much ice. In fact, the claim sounds more like untreated hogwash from a chingkie pigfarm especially when juxtaposed with pre 2008 operating costs and profits:

2007: RM121million (OC) ; RM51.6million (PBT)
2008 : RM130million (OC) ; RM27.7million (PBT)
2009 : RM 134million (OC) ; RM15.8million (PBT)

A case of costs going up by 10% but profits plunging by almost 69%!!!! some business acumen there. Guano tries to gloss over the disaster by citing the economic malaise but the hard facts shout back that while trade consumption had gone down by 5.9%, domestic consumption somehwat mitigated this by increasing 2.5%. Guano attempts another con by trotting out operating costs and harps about lower returns from disposed investments, interests and dividends. However, he conveniently hides the reality that this latter income were already plummeteing pre-2009, way before the crisis

2007: RM22.9million
2008: RM13.5million
2009: RM11.5million

Indepth analysis would reveal that administrative costs had balloned by a whopping RM15 million in the two years Guano arrogantly ascended the throne (from RM31million in 2007 to RM46million by 2009)
Little wonder then, given this profligacy,EPS has plummeted dramatically over the past 2 years and is in real danger of plunging through the gutterhole and being washed away by the toxic effluents eddying in there.
2007: RM 13.28
2008 : RM 9.45
2009 : RM 4.47

What must surely take the cake was the fact that the moron noted that while water generation increased by 1.7% , this increased output was frittered away by NRW! My gawd! You produce for the sake of wastage. What a nincompoop!!. To put matters in their propoer perspective, the flow of Non Revenue Water has been cranked up a notch:

2007 : 16.9%
2008 : 16.9%
2009: 19.1%

Guano attributed this to budget limitations but operating costs actually increased by 2.2% over 2008 and cumulative investments to reduce NRW amounted to RM2million and yetNRW creeps up! Talk about efficiency.

But the shit on the cake must be the fact that PBA's BOD rewarded themselves for 2 (since April 2008) depressive years in charge. A look at the pre and post 2008 allowance list will gurgle the tale:

BOD allowance

2007 : 315908 (of which 175608 were for Group level allowances)
2008 : 346955 (of which 187638 were for Group level allowances)
2009 : 423800 (breakdown for Group/company level not available)

A case of allowance rising by almost 30% but performance deteriorating double the amount!! (ROFL).
I will take a breather and allow this titanic of a disaster to sink in before I return with more troubling questions that Guano will be hardpressed to answer.

For your own perusal:

For a comparison with another entity operating with even more stringent constraints in Selangor :

Revert: An enlightened civil society with public good at heart will question every charlatan but in Malaysia, they love a rabble rouser who panders to their racist inclinations.

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