MALAYSIA needs to explore the merging of multiple water operators within the peninsula to improve economy of scale and service quality, thus putting downward pressure on potential water tariff hike and supply risk due to climate crisis.
After all, the increase of water tariff must always remain the last resort after exhausting all form of policy-making tools, according to Parti Sosialis Malaysia (PSM) national coordinator (bureau of environment & climate crisis) Sharan Raj.
“Merging all the water operators within Peninsula Malaysia will bring down the capital expenditure (capex), financing cost, and non-wages costs for the water operators,” he pointed out in a statement.
“The Peninsula-wide water operator proposal paves the way for our national water grid to mitigate climate risk and prolong period of water supply interruptions.”
The national water grid allows treated water to be transported from water-rich states such as Perak and Pahang to drought-prone state such as Negeri Sembilan, Melaka, and Selangor.
Nevertheless, cross border water connections at the border towns of states will bring down the capital cost to connect rural populations.
“As an example, it is cheaper to connect and pump water to Merlimau (Melaka) from Muar (Johor) than from the Durian Tunggul Dam in Ayer Keroh, Melaka,” opined Sharan who is also the PSM Melaka state secretary.
He estimated the Peninsula-wide water operator will have a combined revenue and operational expenditure of RM5.45 bil and RM5.10 bil respectively.
“Henceforth, there will be a surplus of RM350 mil per annum putting downward pressure on the water tariffs,” projected Sharan. “The financial surplus could be diverted for capital expenditure (capex) to reduce reliance on the public taxes.”
Non-domestic users (industry, construction and commercial) represent about 13% water accounts but consumes 39% of water demand within the Peninsular Malaysia.
On the longer term, the higher revenue contributions from the non-domestic users will ensure the financial sustainability of water operators.
“However, Selangor (including Kuala Lumpur) and Johor have nearly half of all non-domestic users in Peninsula Malaysia leaving the rest of nine states at significant financial disadvantage,” justified Sharan.
“Therefore, merging multiple state water operator into a singular Peninsula-wide water operator is in line with the spirit of our Federation which is Bersekutu Bertambah Mutu (Unity is Strength).” – June 2, 2021
