This announcement has not been officially relayed to any of the water operators, says CEO

by FAYYADH JAFFAR / pic MUHD AMIN NAHARUL

PENGURUSAN Air Selangor Sdn Bhd has clarified that it has not received any directives from the Prime Minister’s Office (PMO) on water tariffs.

In his response to The Malaysian Reserve’s queries yesterday, Air Selangor CEO Suhaimi Kamarulzaman said he had not yet received any official communication from the PMO on the matter.

“This announcement has not been officially relayed to any of the water operators,” he said. 

“It is important for us to highlight that all water operators in Peninsular Malaysia are currently eagerly awaiting the government’s final decision on the tariff proposals that we have submitted to the regulator, SPAN (Suruhanjaya Perkhidmatan Air Negara).”

Last week, PM Datuk Seri Ismail Sabri Yaakob said the government has decided to maintain the electricity and water tariff in Peninsular Malaysia, and will introduce a new ceiling price for chickens in its bid to fight rising costs of living.

Meanwhile, Suhaimi added that the tariff proposal that they had submitted was in line with the guidelines and mechanism set by SPAN and had been designed so that the water industry has sufficient revenue to fund operating expenditure, as well as capital expenditure to refurbish and upgrade current water infrastructure and fund future water infrastructure to cater to water demand.

“As the tariff proposal was submitted to SPAN prior to the Covid-19 pandemic and the Ukraine-Russia war, our tariff proposal was formulated based on 2019 prices. Therefore, the tariff proposal did not take into account the unprecedented pressure on our operating and capital costs due to higher energy and materials prices,” he explained.

He said it is crucial that the government meets with all water operators in Peninsular Malaysia in order to reassure all of them that, whatever the decision that has been taken by the government, does not result in severe repercussions in terms of the quality of water services in Peninsular Malaysia.

“Unlike any other consumer-facing business, water operators do not have the option of reducing the amount of water we produce to cope with ever-increasing operating and capital costs.”

Suhaimi said water operators need water tariffs to be set at a level that can sustain their operations in delivering clean and safe treated water to everyone.

According to him, the tariff is the most important factor for the industry to be able to stay financially stable.

“However, the current tariff revenue does not fully cover our capex (capital expenditure) and opex (operating expenses) since it was last reviewed 16 years ago. Regular tariff review is vital to ensure existing infrastructure is properly maintained alongside an appropriate level of investment to run a sustainable business in the long run for the benefit of the consumers,” he added.

Suhaimi further said that they have allocated RM1.2 billion in capex contracts, a significant increase of about 240%, or almost quadrupled the amount from 2020.

In comparison to 2020, Suhaimi said the biggest portion of capex went to SPI 1 (strategic plan and initiative) due to contracts awarded for the development of Stage 1 of the Rasau Water Supply Scheme.

He also said that reports of pipe leakages in 2021 are higher at 135,413 cases compared to 124,614 cases the year before, but lower pipe burst cases in comparison to the previous year at 1,910 cases, which brings Air Selangor’s PBI (pipe burst index) to 6.37%.

He also said that water quality in 2021 has been good. As of December 2021, Air Selangor has a total of 1,122 active water quality sampling stations. The frequency of monitoring conducted at these stations was in accordance with the requirements set by the Ministry of Health.

“In 2021, we achieved a 99.8% compliance rate for the Ministry of Health’s Water Quality Standards. We have also conducted more pipe cleaning work in 2021, with a total of 9,027 compared to 8,853 in 2020. In 2021, we received a total of 1,370 valid water quality complaints, the lowest to date, representing about 0.21% of total complaints reported to Air Selangor.”