Association of Water and Energy Research Malaysia (AWER) has carried out a modeling study on financial loss caused by NRW in Malaysia. The modeling took into consideration of total treated water loss, category of users and lowest average tariff of each state. According to Malaysia Water Industry Guide 2010, average NRW recorded in year 2009 was 36.63% compared to 36.93% in year 2008. The total treated water loss due to NRW is about 1.8 billion cubic meters in year 2009.

Pahang recorded highest percentage of NRW at 59.9% in year 2009 where the total treated water loss is about 200 million cubic meters. However, when compared with total treated water loss in cubic meter, Selangor (including Kuala Lumpur and Putrajaya) recorded the highest at 465 million cubic meters in year 2009 even though its NRW percentage is 32.49%. This is due to Selangor having the highest production volume of treated water in Malaysia.  

Based on the modeling study, the total financial loss caused by NRW in Malaysia was RM 1.62 billion in year 2008 and RM 1.64 billion in year 2009. Therefore, there is an increase of financial loss worth about RM 20 million even the NRW is reduced 0.3% between year 2008 and 2009.

As for Pahang which had an increase in NRW, it recorded RM 136.6 million loss in year 2009 compared to RM 120.1 million in year 2008. This means the financial loss has increased RM 16.5 million and it is also the highest increase of financial loss in the country for year 2009.

The modeling study also revealed that, Selangor (including Kuala Lumpur and Putrajaya) has lost RM 582.3 million in year 2008 and RM 558.0 million in 2009 due to NRW. However, there is saving of RM 24.3 million because of reduction in NRW from 33.95% in year 2008 to 32.49% in year 2009. This NRW saving is also the highest in the country followed by Sabah and Labuan. Sabah has saved RM 8.2 million and Labuan has saved RM 1.03 million in year 2009 respectively.

The total revenue for water services sector in 2009 is RM 3.93 billion. The total financial loss from the modeling study caused by NRW is about 41.7% of the total revenue. If NRW can be reduced, the surplus in water services industry can be increased to a much sustainable level.

AWER urges Suruhanjaya Perkhidmatan Air Negara (SPAN) and Ministry of Energy, Green Technology and Water (KeTTHA) to form a special task force to directly focus in keeping national NRW value to below 20% by year 2020. This calls for stricter NRW key performance index (KPI) for water operators in Malaysia. This is because reduction in NRW will reduce the water treatment and supply cost where it will directly assist to achieve an equitable tariff for Malaysians. AWER also suggests that, NRW should be a leading KPI to determine tariff adjustment for future tariff setting process.

We also urge funding for reduction of NRW Capital Expenditure (capex) works should be done according to Water Services Industry Act 2006 (WSIA). All water operators should be licensed by SPAN and loans from Pengurusan Aset Air Berhad (PAAB) should be used. This is to prevent bloated cost that may affect tariff. Therefore, it is undeniable that water services restructuring based on WSIA Regime will play a key role in ensuring National Water Security while achieving an equitable tariff.