Govt offers RM3.8b write-off to expedite water sector restructuring

PM has given state govts until Dec 31, 2019, to agree to the restructuring scheme before their respective loans are settled


PUTRAJAYA has offered to write off up to RM3.8 billion owed by state governments as the federal government seeks to expedite the restructuring of the much delayed national water services industry.

Debts incurred by the states between 2001 and 2018 were used to finance rural water supply projects, but repayments have been slow as many states are facing challenges in registering sufficient income.

Prime Minister (PM) Tun Dr Mahathir Mohamad has given state governments until Dec 31, 2019, to agree to the restructuring scheme before their respective loans are settled.

The restructuring of the country’s water supply was revived late last year after almost two decades of impasses. The proposal, when accepted by the respective state, will see a consolidation of water assets under one entity — similar to what has been achieved in Selangor.

Selangor has acquired all four water concessionaires to streamline its water services industry, despite being drawn into a long and complicated affair.

Many states face similar problems of water supply cuts and shortages due to old water treatment centres and a porous distribution network.

The absence of a regulatory standard has made it impossible to normalise systems and tariffs.

Dr Mahathir made the offer at a news conference after chairing the National Finance Council meeting in Putrajaya yesterday.

It is not known how the states will respond to the offer as state governments have always wanted to control their water resources, despite huge capital investments and political pressure not to raise rates.

The debt clearing offer could end the about 20-year impasse between the federal government and the states.

Dr Mahathir also said the federal government has agreed to distribute 50% of the tourism tax revenue to the state governments starting this year.

He said the distribution is to facilitate the maintenance of tourist facilities and marketing activities, as well as improve tourism statistics reporting.

Earlier in March, Finance Minister Lim Guan Eng announced that an estimated RM67.74 million from last year’s tourism tax would be distributed to the states in 2019.

Lim listed the amount to be distributed to Sabah at RM12.67 million, Penang (RM10.98 million), Selangor (RM10.3 million), Johor (RM7.99 million), Pahang (RM7.86 million), Melaka

(RM5.35 million), Kedah (RM5.08 million), Sarawak (RM2.58 million) and Negri Sembilan (RM2.47 million).

The money could be used to improve their tourism infrastructure, a key economic driver for many states.

Dr Mahathir said the council has also agreed to allocate an additional RM60 million to low-income states to protect forest reserves and marine life.

On toll rates, the PM said the government has not made any decision to reduce the rates in the country, despite suggestions from Tun Daim Zainuddin that it could be cut by 25%.

“That is his opinion, but we have yet to study how we are going to reduce the toll rates. There have been some proposals from the private sector on how we can do it, but not to the extent of reducing toll rates by 25%. The government has not decided on this,” he said.

“It is true that if we abolish tolls, the people will feel relieved because they do not have to pay tolls, but the pressure will be on the government. We will have to pay the price,” Dr Mahathir said.