"Service Before Payment" Approach To Sewerage Services Privatisation

It must have been a relief to many when the Government announced that the current IWK's charges and services were unacceptable and that it wanted IWK to resubmit a fresh proposal for negotiation. Though it was a welcoming but belated announcement, it remains a concern to many consumers who still are rather sceptical about the outcome of the coming renegotiation. This is based on very scant information available from the Government and IWK on the basis on which the renegotiation would be conducted.

It has been reported that the new sewerage charges would only be levied when services are provided, i.e. the consumers will only pay for work done. This concept of "service before payment" requires not only a vast amount of data and information on the current extent and level of service available in each area or district, but also a comprehensive programme of capital works to improve and upgrade the existing service in that area. Unless the Department of Sewerage Services (DOSS) and IWK have the required data base in hand, it would not be possible for both parties to come out with an equitable formula to cover the whole nation.

Let us take an example of an urban area like Petaling Jaya and see how this concept of "service before payment" can be applied practically and equitably.

Petaling Jaya has been developed over the last 30 years in a piece-meal manner and without a comprehensive infrastructure master plan. The end result is that, as far as sewerage service is concerned, Petaling Jaya is currently served by many types and sizes of sewage treatment facilities. Majority of them are imhoff tanks, communal and individual septic tanks and oxidation ponds; all of various designs, layouts and levels of performance.

To undertake a meaningful privatisation of sewerage services under such a situation as in Petaling Jaya and on a "service before payment" basis, it would be necessary to do it under two distinct stages as follows:

Stage One-----Immediate improvement works ( first 5-year period) and

Stage Two---Medium and long term improvement works ( 6th year to end of concession)

Under Stage One, IWK would have to carry out a comprehensive survey to identify and define the existing systems, their current performance and deficiencies. From this survey, IWK would be in a position to determine the extent of remedial works required and therefore the costs to rehabilitate, maintain and operate the existing systems to comply with current standards. When this stage is satisfactorily completed sewerage charges, based on the works done, would be levied to those benefiting from it.

Under this stage, households with individual septic tanks would not be affected. However, when services of IWK are required to desludge the tanks, a fee would be levied for each desluding. Nevertheless, DOSS must ensure that IWK has adequate and proper sludge treatment and disposal facilities.

In connection with this, it must be emphasised that there is no technical justification for IWK to insist that an individual septic tank should be desludged once in two years!

While Stage One works are in progress, IWK should focus its attention to develop a detailed sewerage master-plan for the area covering, say a planned period of 20 years to provide not only an integrated and efficient central sewage system for the area but also for new demand and growth. During this planned period, it is expected that all individual septic tanks would be abandoned and all households would be connected to the new central sewage systems.

With this plan in hand, a 5-year programme of investment, similar to our Malaysia's 5-year Development Plan can be formulated for each area. These 5-year programmes should be reviewed where necessary before and during implementation.

On completion of each 5-year programme, the prevailing sewerage charges would be reviewed and increased if necessary.

In short, the above approach is now commonly known as "Asset Management Plan" (AMP) and has been adopted by many public utility companies /authorities in Europe. It is also beginning to gain acceptance in Malaysia especially by some water supply authorities here. An AMP is simply to provide a systematic approach to capital works and other expenditure associated with improving and maintaining the condition and performance of assets

However, to undertake the privatisation of sewerage services covering the whole nation in one contract using this AMP approach would require tremens amount of manpower and financial resources both from the Government and the privatised operator. Under the current situation, it is not likely that DOSS and IWK are adequately equipped to undertake this mammoth project. One way out may be is to cut the clothe according to the cloth and limit IWK's participation to only the critical areas.

It is hoped that this time the Government and IWK are fully aware of consumers' expectation. It is also hoped that the revised charges and services would be worked out based on a realistic, practical and acceptable approach; as any "guesstimate" resulting from the blind leading the blind will once again be totally rejected by the consumers.

This article was sent to NST on 28, May 1996 but was not published.

nakedeyeview.com.my 2008