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Given the current climate of economic uncertainty, such an increase and its knock-on effects would be a devastating blow to whichever political coalition is perceived to be at fault.

Under the 30-year concession agreement inked in 2005 between supply company Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) , the federal government and the Selangor government, periodical tariff hikes are provided for as long as Syabas meets certain conditions.

Energy, Water and Communications Minister Datuk Shaziman Abu Mansor recently said that according to the "National Audit Department's estimates, Syabas could increase the tariff by 30 per cent although the agreement stated 37 per cent because the company had met almost all the conditions”.

However, the concession can be revoked and the water tariff restructured after the assets have been handed over, according to Shaziman.

An ongoing nationwide process of centralising water assets is due as the Water Services Industry Act 2006 requires all water assets except those in Sabah and Sarawak to be sold to the federal government, said to be a move to make water supply management more efficient.

Under the Act, assets will then be leased back to the respective states to administer water supply to consumers.

The Malacca government recently relinquished its assets for RM889 million.

While the hike may be a useful bargaining chip to force the Pakatan Rakyat state government's valuation of assets downwards, standing in the middle of complex negotiations between the state administration and PAAB are the private companies which own part of the water assets in the state.

Charles Santiago, of the Coalition Against Water Privatisation, told The Malaysian Insider that these companies could scupper any agreement by insisting on relying their own valuation of their assets and this could break down negotiations.

Puncak Niaga, which has become synonymous with Selangor water supply, was established while Umno information chief Tan Sri Muhammad Muhammad Taib was then menteri besar.

Its founder and executive chairman Tan Sri Rozali Ismail is known to be a close associate of Muhammad.

Umno is understandably keen on regaining Selangor from PR. As such, there could be an internal conflict within BN ranks as to how to approach the situation.

Shaziman has so far been making comments to the effect that PAAB could save Selangor from the impending tariff hike.

This hike has already been deferred from Jan 1 to April 1, incurring a penalty for the federal government which may breach the RM100 million mark.

But Umno elements in Selangor may want a tariff hike which could hurt PR. Muhammad is also currently running for the post of Umno deputy president and may want to show delegates that he is still an influential force.

The question now is the valuation of the assets.

The Malaysian Insider understands that all players are coming to the negotiation table in the next few weeks.

It has been speculated that Puncak Niaga, which owns 70 per cent of Syabas, wants RM6 billion for its water assets.

Selangor Menteri Besar Tan Sri Khalid Ibrahim claims that the company only treats 20 per cent of water supply in the state.

Sources say that the state owns about 80 per cent of water assets but Shaziman estimates the total assets to be worth about RM5.5 billion.

These figures clearly show negotiations may be protracted or even an impasse may occur, resulting in April's tariff hike taking effect.

Santiago, who is the DAP MP for Klang, said negotiations will be fiery as all parties will attempt to use public opinion and the media to gain leverage.

Appointed as an advisor to the state government on the matter, he expects private companies to be the bottleneck in talks as both federal and state representatives are desperate to tie up the deal.

With consumers watching closely, it is set to be a political firestorm which could damage either the PR state government or the Barisan Nasional federal government, or both.