nakedeyeview.com.my 2008
Tussle Over Water Supply In The Klang Valley
1. Tussle between Selangor State Government and the Federal Government
Since 2008, the issue on Sungai Langat 2 Water Treatment Plant was raised when PKR took over the administration of the Selangor State Government. However, it was only recently that the differences in opinion between the Selangor State Government and the Federal Government on Langat 2 Project were highlighted in the media.
Langat 2 Water Treatment Plant is part and parcel of the Pahang/Selangor Water Transfer project. The Tunnel, about 45km long, was completed and Langat 2 Project is supposed to be completed by 2014.
The current tussle between Selangor and the Federal government is mainly on the construction of Langat 2 Project. The Federal Government through the Minister of Energy, Green Technology and Water insists that construction of Langat 2 should commence immediately and to be completed by 2014 to avoid a water crisis. However, the Mentri Besar of Selangor disagrees and contends that the state would meet the treated water demand by restructuring the water services industry, reducing Non Revenue Water (NRW), tapping into groundwater and stepping up water conservation efforts.
Both the State and Federal Government have proven their points on the surface. But it is important to take a closer look at the issues in order to enlighten the consumers in the Klang Valley.
2. Views of Selangor State Government
2.1 Institutional set up
To begin with, let's take a look at the institutional set up of water supply in the state of Selangor. Under the Federal Constitution, water supply is a state matter and the Selangor state government, through the state water supply department (JBA Selangor) was responsible for the development, operation and maintenance of water supply in the state including the Federal Territories of Kuala Lumpur and Putrajaya. Before the corporatisation of JBA Selangor in 2002, the state government had already privatised all water treatment plants in Selangor and Kuala Lumpur to three private companies, namely Konsortium Abbas (Sg. Semenyih treatment plant), SPLASH (Sg. Selangor Phase 1 & 3 and Puncak Niaga (Sg. Selangor Phase 2 and all other water treatment plants in Selangor and KL).
JBA Selangor was corporatised in 2002 and was known as Perbadanan Urus Air Selangor (PUAS).
At the end of 2004, the State Government of Selangor and the Federal Government granted a concession to Syrikat Bekalan Air Selangor (Sybas) to take over PUAS for a period of 30 years commencing on 1/1/05. The shareholders of Syabas are Puncak Niaga Holdings Bhd (70%) and Kumpulan Darul Ehsan Bhd (30%) while the Federal Government holds one golden share.
Syabas now supplies treated water to a population of over 7.5 million including industrial and commercial users. Syabas also undertakes to maintain over 26,000 km of water mains and about 1,500 reservoirs and water tanks within the State of Selangor, Kuala Lumpur and Putrajaya.
It is a known fact that all water concessionaires are in heavy financial problems. According to Syabas’ concession agreement, Syabas was supposed to raise water tariffs by 37% in January 2009 followed by 25% and 20% increases within the next six years. But all these tariff increases did not materialized as the state government claimed that Sybas did not fulfill certain criteria in the concession agreement.
2.2 Restructure water services in Selangor
To restructure water services in Selangor, the State Government must take over the services operated by all the concessionaires. In this respect, the state government had previously made two offers to the concessionaires: one for RM5.7bil in early 2009, which was rejected by all and another in the middle of last year for RM9.4bil that was rejected by Syabas.
The Federal Government had also made an offer of RM10.3bil last year but it was turned down by Syabas.
Like any privatization company, Syabas is essentially driven by profit, that is, the more water it sells, the more profit it will make. But privatization is being put forward as the solution to resolve the high percentage of NRW and to promote efficient use and conservation of water. But the need to create profits and conserve water at the same time is a conflicting proposition.
Therefore, to restructure water services in Selangor the state and federal government must cooperate to ensure that the former takes over the operation of Syabas and other water treatment plant concessionaires. But this is easier said than done because the two governments are run by two opposing political parties since 2008.
2.3 NRW reduction
The second point put forward by the Mentri Besar of Selangor to avoid the water crisis was to reduce Non Revenue Water (NRW). NRW is that amount of treated water put into the supply that earns no revenue. It is caused by pipe leakage, reservoir overflow, under recording of meters, illegal connection and legal non-metered supply like fire fighting and pipe flushing etc.
In Malaysia, leakage constitutes up to 70% of NRW. In Selangor, when Syabas took over from PUAS in 2005, NRW was over 42% of production and at the end of 2010 NRW in Selangor was 32.45% according to the figures shown in Malaysia Water Industry Guide 2011.
In an area where NRW is high, as in Selangor in 2005, the first 10% reduction of NRW is easy to achieve. Replacing meters of over 10 years old and plugging all major illegal connection would probably reduce NRW by over 5%. However, to reduce NRW to an economically acceptable level of say 25% requires a long term leakage detection and comprehensive pipeline rehabilitation program.
Agreement on annual NRW reduction targets should have been stated in the privatization agreement. Reduction of NRW should be one of the main corporate objectives of all water supply concessionaires because the amount of water saved can be used to supply new consumers to generate extra revenue. Also, the reduction of NRW will help to defer capital expenditure to develop new sources of supply.
In short, NRW reduction is one of the major yardsticks to gauge the overall performance of the water concessionaire.
2.4 Tapping ground water
The third point put forward by the Mentri Besar of Selangor was to tap into ground water. During the 1998 water crises, the Selangor state authorities were trying to develop groundwater sources, but all came to naught.
There is little groundwater in Peninsular Malaysia – certainly not in the quantities to meet the huge demands of today. This can be seen on the hydro-geological maps published by the Geological Survey Department of Malaysia. The best that can be expected is from a well in alluvium “generally along coastal areas” and “brackish in most areas”. Further inland, in limestone, shale, to igneous rocks, the yield drops to very little. Therefore the availability of groundwater in Selangor is insignificant to satisfy the water demans in the Klang Valley.