Restructuring plan to ensure efficient water service

SHAH ALAM, Feb 26 (Bernama) -- Selangor Menteri Besar Tan Sri Khalid Ibrahim said the restructuring of the Selangor water services industry is crucial in ensuring that the people of Selangor, Kuala Lumpur and Putrajaya get efficient, effective, and sustainable water services at reasonable rates.

In explaining the restructuring, he said under the Water Services Industry Act 2006, the water assets of states would be transferred to Pengurusan Aset Air Berhad (PAAB) at book value.

As such, he said the acquisition of the water assets would be funded by PAAB while the state government would fund the acquisition of the equity of the water concessions, he said in a statement today.

At present, he said the state government had received interest from local and foreign financial institutions to finance the deal that it considered to be reasonable as it gave a 12 per cent per annum return on equity for the takeover of all water-related assets and liabilities in Selangor.

Khalid also said that the core issue of the water problem was non-revenue water (NRW) or water that had been wasted due to inefficiency.

He claimed that water concessionaire Syabas' failure to reduce NRW to an agreed rate of 19.98 per cent in 2011 was mainly due to bad management as well as poor planning and implementation of the NRW reduction programme.

Khalid said it was not right for Syabas to cite the freezing of capital expenditure (capex) by the state government as the main cause of the failure to reduce NRW, adding that the capex freeze was essentially a result, not the cause, of the high NRW.

Apart from the capex received, he said Syabas also received RM610 million from 2008 to 2012 for the state's free water programme, yet it remained in dire financial straits and still owed water operators some RM3.4 billion.

Based on an agreement, Syabas was supposed to reduce the NRW to 19.98 per cent in 2011 with a capital expenditure of RM784.1 million but instead the company spent RM995.7 million while NRW remained at 32.31 per cent, he said.

Khalid said Syabas spent RM1.16 billion to reduce NRW in 2012 but NRW still remained at 32 per cent.

He alleged that the failure of Syabas to reduce NRW resulted in a loss of 633 million litres per day (MLD) of treated water in Selangor, Kuala Lumpur and Putrajaya.