State will save in processing water but rates may rise, says water association

KUALA LUMPUR: Association of Water and Energy Research Malaysia (Awer) believes that the Selangor government’s impending takeover of Syarikat Pengeluar Air Selangor Sdn Bhd (Splash) could have an impact on the state’s water tariff.

Awer president S. Piapakaran said with all companies structured under Pengurusan Aset Air Bhd (PAAB), there would be debts which needed to be settled.

He estimated that water tariffs could go up by a single digit to enable Pengurusan Air Selangor Sdn Bhd (Air Selangor) to repay its debt to PAAB.

“Cancelling concessions will lead to lower costs, but Air Selangor has to make (debt) repayments to PAAB, thus the increasing cost.

“If the tariff is not raised, there will be outstanding costs because a takeover involves assets, equity and then liability.

“Equipment, workforce, minimum wage implementation and material costs already encompass one third of the operational costs. In addition, water treatment plants use electricity, and electricity costs have gone up.

“There will definitely be a rise (in water tariffs) unless Air Selangor is only looking at a 0.1 per cent profit.

“But that’s highly unlikely as it is a business. No one wants to operate a business this way,” he said.

On the savings gained following the termination of concessions, Piapakaran said Air Selangor would pay RM1.9 billion to Splash, while the remaining RM650 million would be repaid over a nineyear period by PAAB.

He noted that it was proper for PAAB to be shouldering the debt and not the state government.

“When all concession agreements with the four companies — Splash, Konsortium Abbas, Puncak Niaga Sdn Bhd and Syarikat Bekalan Air Selangor — are terminated, this spells an end to bulk purchasing of water.

“All treatments and supply will come under a single company. There is no need to pay one sum for treatment and another for supply. So we see savings made possible in this respect,” he said.