Selangor water transfer project - get on with it!

It is of great concern to read from reports in the Wall Street Journal (May 21) and our local dailies (May 22) that construction of the crucial interstate Pahang-Selangor water supply scheme may be further delayed.

In March this year, the Malaysian Government, after much protracted negotiations, inked an agreement to obtain an equivalent of RM2 billion loan from the Japanese Bank of International Cooperation (JBIC) to finance part of the Pahang - Selangor water transfer scheme.

It is reported that the Malaysia Government is now having a second thought on taking the Japanese loan because of fears that local contractors will lose out to the international big guys. This reported rejection of the Japanese loan was promptly denied by our Second Finance Minister who was reported to have said "we are still holding talks with the Japanese".

The project was identified in the 90s and construction was supposed to begin in 2001 for completion in 2006 to cater for the increasing water demands in Selangor, Kuala Lumpur and Putrajaya. From year 2007 all developable unpolluted water resources in Selangor would have been fully utilized.

The 2,200 million litres per day water supply project involves the construction of a dam and a 44km raw water tunnel of over 5m in diameter in Pahang estimated at RM3.5 billion and downstream works (water treatment plants and distribution works) in Selangor estimated at RM4.5 billion.

The Japanese loan is taken by the Federal Government to finance only the raw water transfer scheme in Pahang. The major cost of the project in Pahang is the construction of the raw water transfer tunnel, which requires foreign equipment and expertise. This tunnel falls within the critical path of the timely completion of the whole scheme.

The procurement guidelines of international lending agencies like JBIC require international open tenders for all works and supplies to be awarded after pre-qualifications of contractors and suppliers.

So the question of local contractors failing to secure major works in this scheme does not arise at this juncture. Experienced local contractors can tender for the works on their own or in joint venture with other local or foreign contractors. With home ground advantage, there is no reason why they cannot secure a major portion of the works unless they are not competitive enough and require a "big helping hand" from the Government. In the past nearly all major works in this country have been given out without open tenders allowing corruption, favourtism and nepotism to creep into the award of contracts, resulting in higher costs, substandard works and late completion or abandonment of works.

The fear of insufficient involvement by local contractors is totally unfounded. While the dam and the tunnel located in Pahang are open to international bidding, the downstream works located in Selangor are only open to local contractors with local financing.

The timely completion of the interstate Pahang-Selangor water supply project is critical. Even if it the project takes off the ground now, it would only be completed in year 2011 and consumers in Selangor, Kuala Lumpur and Putrajaya would have suffered because of water shortage and rationing from year 2007.

One cannot imagine the impact to the economy if the project were to be further delayed. It may be worse than that of 1998 - 2000 Asian financial crisis.

It is hoped that the-powers-that-be would get the project started without further delay and not simply cave in to the demands of a few local big boys in the construction industry at the expense of over six million water consumers in the Klang Valley.

The above story was published I Malaysiakini on 31st May 2005. 2007