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The concession agreement of Indah Water Konsortium Sdn Bhd (IWK) was suppose to end on 31st March 2022. However, the Ministry of Environment and Water (KASA) has signed an agreement with IWK to extend the concession agreement for another 12 years on 12th August 2021. After the announcement, Association of Water and Energy Research Malaysia (AWER) studied the past documents and chronology that brought to us the National Water Services Industry Restructuring (NWSIR).  

In the past, IWK has made many attempts to extend concession agreement and avoid to be restructured under NWSIR. Thus, the current announcement is not surprising. Unfortunately, KASA does not have jurisdiction to extend the concession agreement of IWK. KASA can only end existing concessions that are listed in Water Services Industry Act 2006 (WSIA) and restructure these agreements to follow NWSIR using WSIA model. NWSIR was a policy that gave birth to WSIA, Suruhanjaya Perkhidmatan Air Negara Act 2006, amendment to federal constitution and respective state enactments to give executive power to Federal Government on water treatment and supply as well as breaking sewerage services (IWK) and merge with state-based water companies. These changes do not involve Sabah and Sarawak.

Early December 2020, there was another privatisation attempt on IWK with announcements by Ranhill Utilities Bhd (RUB) to Bursa claiming Minister of Finance, Incorporated wanted to dispose IWK shares to RUB. Such bold claims were dismissed by Ministry of Finance (MOF). Unfortunately, no investigation was done on this false claim made by RUB (which later retracted the announcements) and if there is any involvement within MOF and/or IWK.

AWER vehemently rejects any step that is derailing from the NWSIR. We urge the YAB Prime Minister and the cabinet to immediately stop this inane extension of IWK’s concession agreement and stick to the original restructuring model that was agreed upon prior to amendment of Federal Constitution in year 2006.

Privatisation is a failure
Privatisation of water services industry (water treatment, water supply and sewerage services) was a proven failure and IWK was one of the prominent examples of such failure. Surprisingly, KASA claimed IWK did excellently in the past 30 years without providing any solid and relative comparison. Under WSIA model, concession agreements will be phased out and state governments will form companies to manage water treatment and supply to increase transparency and efficiency. IWK is supposed to be broken to state based entities and merged with water services companies at state level by 2010. This was the model that was presented to state governments and Conference of Rulers which was agreed upon before amendment to Federal Constitution and respective state enactments. KASA’s move to derail implementation of WSIA model will cause state governments to question legitimacy of the move and may fight to undo the amendment to Federal Constitution as the Federal Government failed to keep to the actual restructuring plan. The merger of water treatment, supply and sewerage services was seen as the best model to ensure economic, social and environmental sustainability after comparing many models around the world. What is KASA’s objective in breaking promises made to the Conference of Rulers and state governments with regards to NWSIR?

What should be done to IWK?
IWK’s restructuring delay is also caused by IWK’s own personnel lobbying to derail from the actual restructuring plan. These officers only see their own interest superseding the nation’s interest by delaying this process for many years. AWER has already proposed a plan for IWK’s restructuring to MOF in the budget 2022 consultation process and many previous consultations. The plan is to break IWK’s operation into state based entities and merged with respective state water companies in 3 phases until 2025.

Phase 1: Selangor (Putrajaya and Kuala Lumpur), Johor, Melaka, Labuan and Penang to be completed by June 2022.
Phase 2: Kedah, Perlis, Perak and Negeri Sembilan to be completed by end of 2023
Phase 3: Kelantan, Terengganu and Pahang to be completed by end of 2025

Upon completion of the merger, water companies can optimise treated water, treated effluent, waste to wealth and business integration despite of controlling pollution to the environment and reducing water treatment cost which eventually lead to equitable water tariff and self sustaining water services industry. Therefore, is it fair for the nation when a small group of individuals within the senior management of IWK and their conspirators to block the gain for actual social, economic and environmental sustainability that can be achieved by implementing WSIA model?

AWER urges YAB Prime Minister and the cabinet to step in and do not allow this derailment move to proceed. Immediate purging of KASA and IWK senior management must be done to prevent Federal Government being seen as breaking promise with state governments. We need to implement the National Water Services Industry Restructuring to ensure water security is achieved. Any derailment will only threaten Malaysia’s water supply security and will cost us more in near future to mitigate arising problems.

Association of Water and Energy Research Malaysia (AWER)

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