May 4, 06 3:42pm
Over the next 45 years, approximately RM100 billion will be spent to refurbish, maintain and expand the water supply infrastructure. Is this money going to be well spent or is it literally money down the drain?
The growth is evident as the Ninth Malaysia Plan clearly indicates phenomenal jumps in the allocation for investment in the water sector. In the 9MP, the Barisan Nasional government is allocating RM16.5 billion to the water sector, a 113 percent jump from the 8MP.
Selected private sector companies will benefit tremendously from these projects. By the end of this article, I hope readers will be able to ask a few questions on the new water bills and whether they can be adequately answered. Among the questions are:
- Will the Water Bills optimise the use of taxpayers’ money?
- Are these expenditures really necessary?
- Are there not better ways to manage water demand?
- Will the Bills guarantee continued safe and affordable water supply?
- Are the Water Bills merely an instrument to allow the private sector to cream off the development expenditure allocation and eventually dump the problem of water supply back on the government, as other BN privatisation projects have shown?
The BN government is currently attempting to regulate the water sector in peninsular Malaysia and the Federal Territory of Labuan by introducing two bills, namely by the Suruhanjaya Perkhidmatan Air Negara (Span) Bill 2006 and the Water Services Industry (WSI) Bill 2006.
The WSI Bill 2006 seeks to regulate water supply services and sewerage services. The Span Bill 2006 seeks to establish a commission that will supervise, regulate and enforce the laws pertaining to water supply. Both the water bills are seriously flawed and cannot address the current challenges in the water sector.
It is unclear what the position of the Malaysian government is with regards to water demand management. Based on policy statements in the 9MP and comparing them to the table at left, the Malaysian government manages water demand from the supply side as evidenced from the development expenditure on infrastructure which does not allocate any resources to demand management.
The 9MP states: ‘Efforts will be undertaken to conserve the quantity and improve the quality of existing water resources as well as identify potential water resources to be developed to ensure adequate and sustainable supply of water.
‘The efficiency of water supply will be improved through the NRW reduction programmes. Measures to be undertaken include strict enforcement against water theft, pipe and meter replacement, Geographical Information Systems (GIS) mapping of distribution networks, rehabilitation of distribution systems and upgrading of existing WTPs as well as setting up operations centres.’ [pg 386, RM9]
Suffice to say that there is no mention of water demand management anywhere as a policy measure under the 9MP.
More telling is that the new water bills do not require the water supply operators to strive for water demand management. The operators only have to provide a business plan to show their viability. Furthermore, with the government providing financing for the building of infrastructure, this removes another instrument in water management to the operators.
Water operators will now only focus on supplying water with no consideration to the management of water as their profitability is based on the amount supplied.
This matter has to be seriously looked into as scarcity of water or the high cost of sourcing for water will eventually lead to exorbitant end-user prices which will impact on equity and access issues.
The two bills also set a dangerous precedent as they give the minister responsible absolute powers. The minister is the final decision-maker on all maters and the function of the commission is only to advice the minister (Section 15 [a]).
Section 5 of Span states that the minister appoints the water commissioners and Section 11 states that the minister has the authority to fire them without providing any reason. Section 182 meanwhile, also allows for the minister to amend the Schedule.
The selection of the commissioners is also at the pleasure of the minister (Span, Section 5). The criteria stated in Section 5  [c] is heavily biased towards industry professionals and civil servants, who are partly responsible for the current state of woeful affairs in our water sector.
The Papa clause
More amazing is that the bill allows for any wrongdoing committed by the commissioners through the Public Authorities Protection Act 1948 (Papa 1948). Section 183 of this Act therefore, effectively ends any possibility of court action against the commissioners and their agents in relation to their duties.
What come to mind is the Highlands Towers tragedy where the Federal Court ruled that a local authority could not be held liable for negligence by its agent, which in the Highland Towers case was a building contractor.
The Papa clause allows for the water commissioners and their officers to get away scot-free for incompetence or negligent acts. The commission may only be sued in its corporate name (Section 3( ) thereby penalising tax payers further for incompetence or negligence by the Commissioners.
The two water Bills do not provide adequate protection for the water consumer. The sections relating to consumer rights’ are vague with no effective legal protection.
There is no provision for consumer satisfaction as a means to evaluate the water operator. The table below illustrates the eroding of consumer rights the water bills bring.
There is also no explicit statement that among the functions of the commissioners is to protect the consumer interest.
There is no guarantee in the two water bills that consumers will have continued access to water, let alone safe, affordable water. This is because the bills allow for water operators to -
- (Section 54) ... upon approval of the Commission – (a) reduce the quantity or pressure of the water supplied to any consumer if by reason of any circumstance beyond its control there is insufficient water to enable the full quantity to be supplied; or (b) temporarily cease the supply of water.
- Section 54(2) ... the water operators shall not be liable for any damage caused by the above.
Furthermore, the water bills do not provide any power to the minister to regulate water catchment areas or for river basin management. More than 95 percent of peninsular Malaysia’s drinking water comes from rivers.
The recent experience where consumers in the Klang valley were forced to consume smelly water and with the water operator pleading innocence for breach of standards and then getting away scot-free, sets the scenario for future outcomes when water operators breach standards.
This is due to the fact that water quality standards will be set by the minister and the fact that there is no compensation clause provided for in the two water bills.
We can safely say that the water bills and the RM100 billion investment will make a few people very happy and rich while making the majority of Malaysians poorer and sadder with no guarantee of continued access to safe affordable water in sufficient quantities.
GREG LOPEZ is programme manager with Monitoring Sustainability of Globalisation and co-ordinator of Young People for Development, Malaysia.