Media Statement
by National Publicity Bureau Assistant Secretary, John Chung
in Petaling Jaya
on Tuesday, October 29, 2002

The Federal Government must ensure that the Selangor State Government's plan to integrate water supply should not result in staggered increase in water tariffs
 

The grand plan by the Selangor State Government to integrate its water supply under a single water company sees keen competition between two rival restructuring schemes, one by Perbadanan Urus Air Selangor (PUAS) and the other by Puncak Niaga Holdings Bhd according to a NST Business Times report (Oct 23, 2002)

Under the first State Government-endorsed restructuring proposal, three water-based companies, namely Puncak Niaga (M) Sdn Bhd, Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) and Konsortium Aliran Bekalan Air Selangor Selatan (Abass) Sdn Bhd would combine under PUAS in a joint-venture plan where each would be accorded its own sphere of operation to supply water to the 5 million Selangor and Federal Territory population.

Under the second Puncak Niaga proposed scheme, which leaves no room for Splash and Abbas, Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) would be used as a vehicle to privatize water supply, clearly underlining Puncak Niaga's intention to dominate the water distribution market.

However, what consumers are worried about most is the likely staggered increase in water tariffs as a result of the restructuring exercise, whichever scheme it may be, whether by PUAS or Puncak Niaga.

According to a Business Times' source, in the case of Puncak Niaga's scheme, water rates will be increased by 45% in 2005, another 40% in 2011/2010, another 30% in 2016/2015 and a further 10% and 5% in 2021/2020 and 2026/2025 respectively.

Even the more conservative and viable PUAS scheme entails a 45% hike in water rates in 2005, 40% more in 2011/2010, another 30% in 2016/2015, and 20% and 15% in 2021/2020 and 2026/2025 respectively.

If it is true that such increases are being envisioned, it would certainly be a burden on consumers and especially acute on those from the lower-income groups, particularly when they would have to stomach two staggering hikes within a 5-year span from 2005 to 2011/2010. Equally, the question would arise as to whether such exorbitant hikes are justifiable.

As it is now, the quality of services provided by PUAS leaves much to be desired with complaints by consumers of regular water disruptions due to burst pipes, murky water supply and bad customer service. One would have hoped that the corporatised PUAS from its former entity as the state waterworks department would have resulted in greater efficiency.

As both the restructuring proposals by PUAS and Puncak Niaga requires approval by the Federal Government, the latter should ensure that whichever plan to integrate the water supply in the state of Selangor should not result in staggered increase in water tariffs that will unduly burden consumers.

Moreover, the proposed restructuring exercise must give priority to proper water demand management with emphasis on water conservation, upgrading of water piping network and minimization of loses of non-revenue water.