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PRESS RELEASE: Federal Government and MACC should Probe All Water Services Industry



Association of Water and Energy Research Malaysia (AWER) urges the Federal Government and Malaysian Anti Corruption Commission (MACC) to probe all water services industry which includes water companies, Indah Water Konsortium (IWK) and Pengurusan Aset Air Berhad (PAAB). The probe should also be in cooperation with Suruhanjaya Perkhidmatan Air Negara (SPAN). SPAN is regulator for water companies including IWK and PAAB in terms of technical, service quality and profit.

Federal Government through SPAN will:
I. Regulate water treatment and supply as well as sewerage
II. Regulate financial resources for water treatment and supply infrastructures (PAAB)
III. Regulate CAPEX (Capital Expenditure) and OPEX (Operational Expenditure)
IV. Regulate profit of national water services industry

SPAN is tasked to prepare a benchmarking of costing for all water services industry. This is also due to many 'bloated' cost elements as well as cartel (price fixing) practices that were in existence. The probe can include the following elements:

(i) Comparing operational costs to fix a Benchmark Value
Benchmark Value is an important value to be used as a reference value to cross check CAPEX and OPEX. These values are obtained from the daily operation by the water services industry. These values should be later classified based on different types of services.

(ii) Differentiate the water services related costs and non-water services related cost
Audit the operators’ costs related to water services and non-water services. Splitting non-water services cost from tariff setting is vital to prevent unwanted cost to be pass to tariff.

(iii) Transparency of operation via open bidding process
Monitor the tender and financial systems practised for the past 10 years by water services industry. Negotiated tenders should be harshly dealt with if found to be above market value.

The state of Sabah and Sarawak is currently not governed under the Water Services Industry Act 2006 (WSIA). These states refused to follow suit the restructuring process. Billions of Ringgits from federal allocation was also been channelled to both of the states for the past few years. However, the resulting output is not clearly reported or audited. Putting up a rainwater harvesting system is not a clean water supply system. Therefore, the probe should also extend to Sabah and Sarawak extensively.

In order to develop water services infrastructure and improve quality of service to people, all states in Malaysia MUST adopt WSIA model. So far Johor, Negeri Sembilan, Melaka and Pulau Pinang has adopted WSIA model to move forward. AWER has also given deadline to Ministry of Energy, Green Technology and Water (KeTTHA) until 30th June 2012 to complete the National Water Services Restructuring process (excluding Sabah and Sarawak) via a letter dated 09 March 2012. This restructuring should have been completed in year 2010.

Involvement of members of public in tariff setting process is an important element in the national water services industry restructuring. Through this method, all level of people can provide their opinion and know the costs of water services. This process should have been implemented phase by phase. However, such a process was denied by a senior officer in KeTTHA few years back. This has also misled the Cabinet. AWER has also urged the KeTTHA Minister to implement the transparent tariff setting process which can eliminate 'bloated' cost and make water operators more responsible in the same letter.

Water is basic need and a basic human right. Water is Life.


Piarapakaran  S.
Association of Water and Energy Research Malaysia (AWER)

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