Jul 31, 04 7:33pm
The Energy, Water and Communications Ministry has identified an approach to cut down the high cost of water in the country by includingsewerage services in its water privatisation projects.
Its minister Dr Lim Keng Yaik said today that a meeting he had with the Economic Planning Unit and the Finance Ministry yesterday has agreed to include the sewerage services to the projects, apart from water treatment and distribution.
He told a press conference in Kuala Lumpur today that such an approach was essential to reduce the high cost of water as a major factor contributing towards the high costs is the separation of water treatment and distribution.
Under the current policy, water treatment projects are handled by private companies while state governments handle the distribution of water.
“This has imposed a high cost on state governments as a lot of water are non-revenue water, which state governments have to bear,” he said.
Modification of foreign models
The minister also revealed that the government has appointed consultant firms to work on a holistic approach for water privatisation projects especially to outline measures that could allow the public and private sectors to work together in sharing the high cost of capital expenditure involved.
On Tuesday, Lim said that the government will need to spend RM50 billion, equivalent to a third of the Ninth Malaysia Plan, in the next five years to improve water and sewerage services.
On the government’s plan to follow closely the United Kingdom water privatisation model, he said the Malaysian model will be a modification version of UK and French model but the regulatory system will be based on the UK model.
Under the UK model, the private sectors are responsible from the beginning till the end of the water services such as sourcing, treatment, distribution, sewerage, billings and collections. In the French model, it is done by the municipality but private companies are tasked with the operation and maintenance.
Earlier, the minister told a forum titled ‘Is Malaysia ready for privatisation of its water resources’, that another interesting part of the UK model was its ‘ring-fencing’ approach which is meant to protect the water services companies in the event that the parent companies become insolvent.
The approach not only manages to attract investors to the water industry but also enables the banking sector to participate in providing long term loans or bonds with low interests.
On the proposed National Water Services Commission, the minister said the commission and the Water Services Act are expected to be ready early next year, subject to parliamentary approval.
The commission will act as a regulator of the water services industry in Malaysia including the sewerage sector and it will be entrusted to put in bench-markings particularly in the area of tariff setting, procurement procedures, quality and technical standards.
He added that a ‘water voice panel’ comprised of consumers and interested groups will also be incorporated in the commission.
On those involved in water pilfering, he stressed that the concerned individual or party will be penalised under the water privatisation blue print.
The forum was jointly organised by Era Consumer, Federation of Malaysia Consumer Associations and the Selangor and Federal Territory Water Watch. About 200 people were in attendance.