Water privatization - are the states trying to beat the red light?

Less than two months after the privatization of Perbadanan Urus Air Selangor (PUAS), it was reported that NS Water Consortium was given the award by the Negeri Sembilan Government to privatize the water supply distribution in the State (StarBiz, 17 Feb.). And less than a week later, it was B-Ventures Diversified (M) Sdn. Bhd. which was reported to have been offered the lucrative privatization of Pahang Water Department by the State Government of Pahang (StarBiz, 22 Feb.).

The privatization of PUAS came as a total surprise to many because Datuk Seri Dr Lim Keng Yaik, the Minister of Energy, Water and Communications had earlier announced a number of initiatives, the most important of which was to put on hold all water supply privatization while his ministry took steps to revamp the whole water supply sector in the country. He also announced that a National Water Services Commission (NWSC) would be set up to regulate privatized water supplies. He emphaised that privatization from now onwards has to comply with benchmarks set by his ministry.

For water treatment and distribution in the country, except Sabah and Sarawak, the jurisdiction would soon be transferred from the state governments to the federal government. A Bill to that effect was passed in Parliament in January this year, but it has yet to be gazetted.

So are Negeri Sembilan and Pahang trying to beat the red light?

However, the reason given by Dr Lim for waiver on privatization of PUAS was that the financial situation of PUAS had become critical. When the privatsation of NS Water Supply was announced, not a word had come forth from Dr Lim. It was only on 23 February that Dr Lim declared that he knew nothing about it.

One should not be surprised then that after Negeri Sembilan and Pahang, the next water privatization could be for Sabah and then the rest of the states would follow suit in open defiance of Federal directives.

One wonders what is happening to the administration in the country. It does not appear that the state governments are working in tandem with the federal administration.

If water privatization of Negeri Sembilan and Pahang were allowed to go ahead, it could be due to any of the following reasons:

1. State Governments are openly flouting the directives of the Federal Government, or
2. The Federal Government has quietly given its blessing to State Governments to go ahead, or
3. The avaricious private sector has an unseen hand pulling string.

For whatever reasons, the recent happenings in water sector in the country have clearly demonstrated that the Federal ministry in charge of water supply is ineffective and may be redundant unless it reins in the rogue states, which openly flout Federal directives. Otherwise, its minister may be seen as a toothless tiger humbly swallowing his own words, for a change!

A. S. Toh


An edited version of the above was published in Malaysiakini on 02/03/05.

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