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14th NOVEMBER 2018


Association of Water and Energy Research Malaysia (AWER) applauds the commitment given by Minister of Water, Land and Natural Resources (KATS) to speed up National Water Services Industry Restructuring. There are many issues need to be rectified in Water Services Sector. We are listing the core issues that need to be tackled to address many clogging problems.

Non-Revenue Water (NRW) Is Still High

As we move to the end of 11th Malaysia Plan (2016 – 2020), we can notice our national NRW level is still about 30% since 8th Malaysia Plan. High NRW is a lost revenue and inability to cater more treated water demand. Delay in water services industry restructuring is another contributing factor for high NRW levels. SPAN's (Suruhanjaya Perkhidmatan Air Negara) target of 25% national NRW level by 2020 will not be achieved as not much effort was really put in place to address this serious matter since SPAN’s inception in 2008.

To add salt to the injury, NRW projects are placed under redundant agency such as Water Supply Department (Jabatan Bekalan Air / JBA). National NRW Reduction Action Plan pushed by AWER must be reactivated to ensure treated water is not wasted due to inefficient management of NRW. Every percentage drop in NRW is availability of treated water for consumers.

JBA and JPP Needs To Be Shutdown

SPAN was formed due to failure of JBA and Sewerage Services Department (JPP) to carry out its duties. These agencies were supposed to be closed once SPAN is fully operational by 2008. JPP has overlapping functions with Pengurusan Aset Air Berhad (PAAB), SPAN and Indah Water Konsortium. JBA has overlapping functions with PAAB, SPAN and water operators. There should not be any attempts to reduce functions of PAAB, SPAN, Indah Water Konsortium or water operators to justify the existence of JBA and JPP. Both JBA and JPP must be closed down and its staff force can be absorbed to SPAN, PAAB, Indah Water Konsortium, water operators or other government vacancies. A full audit of the projects under JPP and JBA must be carried out as well before it is shut down. Closing down redundant agencies will reduce government’s operational expenditures and this is in line with Federal Government’s policy.

Sewerage Capital Contribution (SCC) Fund

There has been allegation on misappropriation of Sewerage Capital Contribution Fund. Usage of SCC fund in territory that is not regulated by SPAN is one example. Projects awarded under this fund must be done transparently to cater capital expenditure needs to expand sewerage network. We urge the Auditor General to audit the Sewerage Capital Contribution Fund and publish the findings.

SPAN Failed To Fully Regulate Pengurusan Aset Air Berhad (PAAB)

Just like the water services licensees, PAAB is regulated by SPAN. Unfortunately, this is not really the case. When project tenders are called, state representatives must sit in the tender award committee. This is important to ensure the state government’s concerns are addressed. Once projects are completed, it is the state government that will pay the leasing fee via their water operator. Moreover, leasing period must be based on three types that are, short term, midterm and long term. SPAN must also audit PAAB’s operation to determine cost to tariff via leasing fee. There should be a benchmark method developed and deployed to ensure financial sustainability of PAAB and water services licensees are protected to ensure successful National Water Services Industry Restructuring.

Save SPAN From Non-Related Field Appointments

We urge the minister to drop appointments from non-field experts as Commission Members of SPAN. At the moment, water services sector from Sabah and Sarawak is not regulated by SPAN. Therefore, there should not be representatives from Sabah and Sarawak as commissioners of SPAN. Rules and regulations must be tightened to prevent any misuse of power or position by commissioners for favour from licensees, products owners and developers related to water services sector.

SPAN Is Slow In Breaking IWK Into State Based Operation

To make the water services industry sustainable, IWK must be broken into state based entities and merged with water operators in respective states. Currently, SPAN and IWK are reluctant to implement the final part of National Water Services Industry Restructuring. Without the final piece of the puzzle, the water services industry will fail. Further delay will also increase the cost of restructuring and dampen improvement of water services industry’s infrastructures as well as services.

Transparent Tariff Setting Failed To Be Implemented Since 2009

SPAN’s tariff setting was designed to be transparent to show members of public and business community the cost of water services and how tariff will be affected by these costs. Unfortunately, SPAN has used cost plus method (a lazy way of setting tariff) in the tariff setting. Such method will pass more cost to the consumers and does not promote efficiency of water services sector. Tariff setting needs to be based on cost audit and benchmarking. There were also interference from the ministry officials in SPAN’s operation previously. We urge the KATS minister to address this issue swiftly.

A Major Revamp In SPAN Is Needed

Incompetent officers must be removed to ensure treated water supply and sewerage services are not affected. Being involved in SPAN’s operation since its inception, it is disheartening to see SPAN deviating from its original role. The National Water Services Industry Restructuring and WSIA model will boost Malaysia as one the best example in water services with affordable tariff in the world. Unfortunately, incompetence plagues this sector and denies the rightful place for Malaysia in this sector. We urge the Minister of Water, Land and Natural Resources to reform SPAN and purge the incompetence.

Water is life.

Piarapakaran S.
Association of Water and Energy Research Malaysia (AWER)














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