Accurate facts and figures needed to be credible
There can be no doubt that "it pays to curb water demand" as the title of Prof. Dr Chan Ngai Weng's article in The Sun (April 12, 2002) proclaims. And Prof. Dr Chan rightly points out that water demand management and privatisation based on meritocracy and performance are crucial to a successful operation of a water supply system.

However, some facts and figures presented by Prof. Dr Chan are inaccurate and stand to be corrected.

Non Revenue Water (NRW), as the name implies, is that portion of the water produced for which no revenue is received. In the national NRW study carried out in 1988, NRW in Malaysia was assessed at 43% of the total treated water production, with loses through leakage accounting for 32% of total production. An intensive nationwide NRW reduction and control programme, costly and taking years to achieve, might reduce the total NRW to 25%. At this level of NRW the amount of water loss through pipeline leakage would still be 18.5% of the total water produced and give a saving of 13.5% (32% - 18.5%) of production.

The 13.5% of production thus saved through leakage reduction will of course be used to satisfy demand in water-stressed areas and generate additional revenue to the water authorities. Or, if all demands have been met, the water saved from loss through pipe leakage will reduce water production by 13.5% with saving all round in running cost.

However, in either of the above scenarios, the water saved from NRW reduction can never be large enough so that "there would be no need to build large expensive dams" as contended by Prof. Dr Chan. This is because our demand for more water is growing at such a high rate that the saving from NRW reduction will be used up in just over a couple of years. This is not to say that we should forget about NRW control. On the contrary, it must be part of an on-going maintenance programme for an efficiently run water distribution system. But the saving in NRW reduction must be seen in the proper perspective.

If water demand doubles every two decades as contended by Prof. Dr Chan, the rate of growth works out at about 4% per annum. This may be true for some lesser-developed states; but for an urban state like Selangor, water demand will double itself every 12 years or so at the 6% per annum growth recorded over the last decade. And as the quantity of water involved is so large, dams are a necessity to sustain supply through dry months of a once-in-50-year drought - the standard we have set for ourselves.

Prof. Dr Chan also presented a table headed "World water prices in 14 countries in 2001" but has 16 countries listed in it, including Malaysia. In this table, Malaysia's price of water (US$0.09 or 34 sen per cubic meter (cm)) is ranked the lowest amongst the 16 countries. But it is not specified whether the water prices are for domestic or industrial use. Furthermore, why compare Malaysia with only 14 of the most developed countries, which are not, except Singapore, endowed with high rainfall?

In Malaysia, each state has its own water tariffs for both domestic and industrial uses. Analysing the current tariffs for domestic use, it will be seen that on the first 35cm, which is the monthly amount of water an average family uses, the average water tariff varies from 31 sen for Penang and Kelantan to 90 sen for Labuan and Sabah, giving an average of 61 sen for the whole of Malaysia. This is almost double that given in the table presented by Prof. Dr Chan.

For industrial supplies, the average water tariff based on the first 500cm varies from 70 sen in Kelantan to 222 sen in Johor. The average for the whole of Malaysia is 122 sen.

Hence the average of domestic (at 61 sen) and industrial (at 122 sen) tariffs cannot be US$0.09 (or 35 sen) as given in Prof. Dr. Chan's table.

Therefore it can be said that the water price for Malaysia presented by Prof. Dr Chan is not a true reflection of the facts. It may be difficult to verify the water price for Germany, but it is inexcusable if Prof. Dr Chan cannot do so for Malaysia's water price.

Dirt cheap or not, with the lowest average domestic water price of 31 sen per cm in Penang, Perbadanan Bekalan Air Penang (PBA), whose holding company PBA Holding Berhad has just made its debut on the KLSE, can still make a handsome profit for supplying water to Penang Island as well as Seberang Prai. Compare to Selangor waterworks, now known as PUAS, its water tariff averages out at 72 sen per cm for domestic supplies, one of the highest in Malaysia. Yet it was reported that it lost RM600 million last year, and water consumers were under threat of another water rationing last month! On top of that the consumers in the Klang Valley are subject to a perennial problem of dirty tap water for a long time with no solution in sight. So a higher water price does not mean that the consumers in Malaysia can be guaranteed of getting more satisfactory water supply services. "Cheap thing no good, good thing on cheap" does not seem to hold any water in Malaysia, in as far as water supply is concerned.

In Malaysia, water pricing has always been based on the following rationale:

  • Cross subsidy for domestic consumers by industrial consumers;
  • Higher rates for higher consumption to discourage wastage and
  • A very low "lifeline" rate to meet the "ability to pay" criterion for lower income group to cover basic everyday need for water for domestic purposes.

So, the tariff structure suggested by Prof. Dr Chan is nothing new. What the water authorities in Malaysia should do is to raise significantly the current rates for higher domestic water consumption in order to make water conservation a way of life.

It is incorrect to say that Malaysia's average water price "has not increased much over the years". As a matter of fact, Selangor increased its water tariffs early last year by a hefty 20 to 60% for domestic consumption and 50 to 60% for commercial and industrial consumers.

And lastly, what has the sale of raw water to Singapore got to do with the subject matter?

Accurate or not the facts and figures presented by Prof. Dr Chan, the bottom line is still that it pays to curb water demand. Raw water resources is finite and therefore the best and the only way to ensure water availability in future is long-term management of demand and not supply. 2007