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Date: 1st NOVEMBER 2021 (MONDAY)


After reviewing the detailed budget for 2022, 12th and 11th Malaysia Plan as well as other related studies and reports for Water, Energy and Environment, Association of Water and Energy Research Malaysia (AWER) would like to highlight the following comments for Federal Government’s consideration:

1.        Rural Water and Electricity Supply
Allocation for alternative electricity supply has decreased from RM 35.6 million in 2021 to RM 30 million in 2022. Allocation for maintenance and repair of water treatment system under JAKOA had an increase from RM 8 million in 2021 to RM 10 million in 2022. As for rural water and alternative water supply, the allocation decreased from RM 472 million in 2021 to RM 382.34 million in 2022. However, the rural electricity supply has an increased allocation from RM 215.6 million in 2021 to RM 485.3 million in 2022. AWER would like the government to audit the past 2 decades’ allocations for rural water and electricity supply and its actual achievement versus targeted output. It is important for Malaysia to identify cost effectiveness, obstacles and potential lessons learnt to ensure the future operation, maintenance and upgrading works can be done in a more effective manner.

2.        Irrigation and Flood Mitigation
Department of Drainage and Irrigation under Agriculture ministry had a decreased allocation for irrigation works from RM 111.96 million in 2021 to RM 103.82 million in 2022. The Department of Irrigation and Drainage (DID) under Water Ministry had an increased allocation to manage dams, flood warning system and flood mitigation infrastructures from RM 722.13 million in 2021 to RM 863.27 million in 2022. AWER would like to urge the government to streamline the projects’ implementations as flood mitigation work can assist irrigation activities and creating an added value to the projects and optimise outcomes as well as cost.

3.        Developing Water Resource Allocation
Few ministries are managing development of water resources and there should be streamlining to ensure no repetitive projects. These agencies should also utilise flood mitigation projects to optimise water resources availability for their intended use as well as cost effectiveness of allocation. Based on current budget breakdown, agriculture ministry was allocated RM 24.5 million in 2021 and RM 18.3 million in 2022 for developing water resources. Ministry of water on the other hand had an increased budget for this purpose from RM 6.06 million in 2021 to RM 12.7 million in 2022 for a project that is estimated to cost taxpayers RM 97.5 million. Ministry of energy and natural resources was also allocated RM 24 million in 2021 and RM 5 million in 2022 for the same purpose but focusing in groundwater. Unfortunately, this project with code number 11900 (Kajian Sumber Air Tanah Negara) had discrepancies in reporting of actual expenditures and total estimated project cost since Budget 2016.  For example, the estimate project cost has increased from RM 68 million for Budget 2016 to RM 113.5 million for Budget 2018 and further increased to RM 129.5 million for Budget 2021. It is almost double of the original estimated cost. AWER would like to urge Auditor General to audit this project under ministry of energy and natural resources.

4.        River Management and Rehabilitation
DID of water ministry is allocated RM 116 million in 2021 and RM 332.84 million in 2022 for river and drainage management as well as rehabilitation. Federal territory ministry was also allocated RM 10 million for 2022 to carry out river rehabilitation project. This ministry also manages River of Life (ROL) project (and sewerage work) that has a total project cost amounting RM 7.7 billion. Allocation for ROL and respective sewerage project is RM 130.14 million in 2021 and RM 225.00 million in 2022. It is high time to audit the ROL project against its original objectives and outcomes to ensure allocations are not wasted. We urge the auditor general to begin auditing ROL project immediately.

5.        Anti Palm Oil Campaign
RM 20 million is allocated to fight anti palm oil campaign for 2022 and a total of RM 47 million is already allocated for both 2020 and 2021. AWER is perplexed that such huge amount (RM 67 million) is wasted on campaigns. If government has invested this amount in research and development as well as a team to carry out Life Cycle Assessment (LCA) for palm oil and other edible oil, we will have solid data to conduct relative comparison. If the data favours palm oil, Malaysia can go to court and overturn bans against palm oil more effectively. Biofuel will play an important role in taking up market share of primary energy input in near future. Thus, it is vital to improve the strategy to protect palm oil products.

6.        Electricity cost in 2022
Electricity subsidy allocation is reduced from RM 80 million in 2021 to RM 78 million in 2022. Due to volatile energy resources supply market, fuel cost is expected to increase. This is due to supply-demand situation and OPEC’s cartel decisions. The supply situation will also be affected by Net Zero commitments and limited transition fuel supply during a bottleneck situation. To add salt to injury, electricity reserve margin in Peninsular Malaysia is super high due to Energy Commission’s failure in carrying out its function as a regulator. In 2022, it is also expected to have an increase of 800 MW (megawatt) of renewable energy supply. How the government is planning to manage increase in electricity tariff due to increase in system cost caused by high reserve margin on top of other external factors?

7.        Water Services Industry
Water supply is allocated RM 340.43 million in 2021 and RM 233.35 million via direct funding and RM 467.42 million via loan in 2022. Therefore, a total of RM 700.77 million is allocated for water supply in 2022. As for National Non-Revenue Water (NRW) project that costs RM 1.91 billion in total, RM 209.35 million was allocated for 2021 and RM 300 million allocated for 2022. However, AWER would like to reiterate that NRW reduction is an operational efficiency and it is not part of green technology. On the other hand, national sewerage project that has a total bill of RM 10.02 billion is allocated RM 764.27 million in 2021 and increase to RM 817.52 million in 2022 which is divided into RM 489.32 million direct funding and RM 328.20 million loan. Indah Water Konsortium (IWK) is allocated RM 110 million for 2022 which is same as 2021.

Based on National Water Services Industry Restructuring (NWSIR), all water operators needed to be consolidated under single company within the states and government water agencies were required to be corporatised. This is an important move to ensure transparency. IWK needed to be ring fenced into state based entities by 2010 and begin merging with state water companies in stages between 2011 and 2015. This move will merge the water treatment, water supply and sewerage services under each state to improve operational viability and sustainability for Peninsular Malaysia and Labuan.

IWK and the ministry in charge of water did not follow the implementation of 9th, 10th and 11th Malaysia plan. NWSIR uses Water Services Industry Act 2006 (WSIA) model that was born after constitutional amendment approved by Conference of Rulers (Majlis Raja-Raja) and Parliament. The predicament water sector is facing now is the incompetent and “vested interest” human capital. Thus, it is imperative for the government to acknowledge this serious situation and make immediate corrective action so that allocations are put into optimised usage.

8.        Net Zero by 2050
Government’s commitment towards Net Zero by 2050 means that every operations, services and goods will be evaluated by the global warming potential measurement to reach a net zero situation and solve climate change only. Thus, establishing voluntary carbon market in Malaysia only shows that the government does not understand what is at stake in the coming 29 years. Water, Energy and Resources Intensive Industries (WERII) will not be environmentally friendly and the emission will be absorbed into every goods and services that involved in their supply chain towards the downstream. If we improve the inputs and the operations of WERII, the whole supply chain will benefit. Thus, it is more important for the government to prepare and develop proper transition solutions as well as important infrastructure upgrading and development to meet the Net Zero targets. We urge the government to use data and science to implement Net Zero as there will be new toxic problems that will hit the world like a tsunami in coming decades with serious supply-demand issues and inequality. Please do not end up like one spoon red palm oil campaign type implementation!

Association of Water and Energy Research Malaysia (AWER)

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