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After reviewing the detailed budget for 2023 with government plans 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 increased to RM 38 million compared to RM 35.6 million in 2021 and RM 30 million in 2022. Allocation for maintenance and repair of water treatment system under JAKOA is maintained at RM 10 million compared to RM 8 million in 2021 and RM 10 million in 2022.

As for rural water and alternative water supply, the allocation has increased slightly in 2023 to RM 379.41 million compared to RM 298.23 million in 2022 but this is lower than the allocation in 2021 which is RM 472 million. On the other hand, the rural electricity supply allocation has also increased to RM 472.07 million for 2023 compared to RM 215.6 million in 2021 and RM 352.35 million in 2022.

While Malaysia is targeting to reach 99% of rural electrification and 98% of rural population with water supply by 2025, the government must audit the past 2 decades’ allocations for rural water and electricity supply and its actual achievement versus targeted output. This move will help 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.    Flood Mitigation
Allocation to manage dams, flood warning system and flood mitigation infrastructures has decreased from RM 722.13 million in 2021 to RM 670.16 million in 2022. However, the allocation has doubled to RM 1.31 Billion in 2023. According to news reports in 2022, the government has estimated RM 392 billion is needed to mitigate flood up to year 2100.

Generally, proposed mitigation projects will be modelled, designed and incorporated with safety factor to make it functional. Unfortunately, when the surrounding land-use changes after the project is completed, it may not be able to function according to the design capacity. This is because the project was not designed to receive higher surface runoff above the design capacity due to land-use change. Thus, it is important that the Federal Government ensures State Governments do not change the land-use and pose risk of failure to flood mitigation projects despite ensuring the effectiveness of the project implementation. There must be a regulatory framework put in place so that all parties play their roles and do not cause mitigation projects to fail and need further allocation to mitigate the ‘failure’.

3.    Anti Palm Oil Campaign
In 2023, government is allocating RM 10 million to fight anti palm oil campaign and a total of RM 67 million was already allocated between 2020 and 2022. Recently, it was also reported that ban on palm oil is intensifying. Now, question has arise if the fight against anti palm oil campaign really work. Has the negative perception about palm oil been changed?

We urge the government to implement proper structured and science based approaches to increase sustainability of our palm oil and other related sector. Compared to spend RM 67 million on such campaign, if government has done research and development as well as carry out Life Cycle Assessment (LCA) for palm oil and other edible oil with this allocation, we will have sufficient data to conduct relative comparison studies by now. When the sustainability of palm oil is proven, Malaysia can fight the bans against palm oil more effectively. Biofuel and biomass will play an important role in nation’s energy mix in the near future. Thus, it is vital to utilise tangible approaches for successful outcome.

4.    Importance of Competitive Bidding (Open Tender Process)
The Prime Minister has pointed out in the budget speech that the government will be able to save RM 2 billion for flood mitigation projects that worth RM 15 billion via open tender process. Similarly, few power plant projects were awarded via direct negotiation and not competitive bidding since 2014. Based on AWER’s modelling, it is estimated that more than RM 15 billion worth of cost saving from competitive bidding was not able to be passed to electricity tariff due to direct negotiation carried out by Energy Commission. The cost saving is estimated based on 3 Combined Cycle Gas Turbine (CCGT) power plant projects that were awarded via direct negotiation between 2014 and 2019. Among this, a CCGT project award was sold to foreign company which is not in line with government procedure. In January this year, AWER has met the minister in charge of energy and proposed few suggestions to renegotiate and reduce the capacity charges under Power Purchase Agreement (PPA) for the power plant projects awarded via direct negotiation as the additional costs incurred are unfair to consumers. We hope the government will take up our suggestions to renegotiate and par down electricity generation cost impact to electricity tariff.

5.     Shut Down Redundant Agencies
The Prime Minister has also pledged that the government will merge agencies with similar functions. This is a call that was already made available in 11th Malaysia Plan. We would like to suggest to Prime Minister few of the agencies that can be shut down by 2023 and merged with existing agencies within the ministry. Under National Water Services Industry Restructuring (NWSIR), a licensing and regulatory framework was established and formation of Suruhanjaya Perkhidmatan Air Negara (SPAN) as regulator for water services sector was made. Thus, Sewerage Services Department (JPP) and Bahagian Bekalan Air (previously Jabatan Bekalan Air) can be shut down and the officers can be absorbed into SPAN and ministry’s water services division.

As for energy sector, Sustainable Energy Development Authority (SEDA) has high redundancy with Energy Commission (ST). The government can introduce a department under ST to absorb the staff from SEDA and shut down SEDA entirely. Yayasan Hijau (YaHijau) is another entity that should be shut down as well. This agency is actually carrying out activities that were done by Malaysian Green Technology and Climate Change Corporation (MGTC) previously. Lastly, under 12th Malaysia Plan, another redundant entity is being planned, Amanah Lestari Alam. The government can do Malaysians a great favour by not forming this redundant entity and carry out functions using existing agencies and entities.

Association of Water and Energy Research Malaysia (AWER)

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