Peninsula-wide water operator would put downward pressure on water tariffs

Malaysia needs to explore merging multiple water operators within the Peninsula to improve economies of scale and service quality to mitigate upward pressure on water tariffs and to lower climate crisis risks.

Water tariff increases must always remain the last resort after exhausting all forms of policy-making tools.

Merging all the water operators within Peninsula Malaysia will bring down the capital expenditure (capex), financing costs, and non-wage costs for the water operators.

A peninsula-wide water operator paves the way for the national water grid to mitigate climate risks and water supply interruptions.

A national water grid would allow water to be transported from water-rich states such as Perak and Pahang to drought-prone states such as Negeri Sembilan, Melaka, and Selangor.

Cross-border water connections at the border towns of states will bring down the capital cost to connect rural populations.

For example, it is cheaper to connect and pump water to Merlimau, Melaka from Muar, Johor than from Durian Tunggal Dam in Ayer Keroh, Melaka.

The peninsula-wide water operator would have a combined revenue and operational expenditure of RM5.45 billion and RM5.10 billion respectively1.

Henceforth, there would be a surplus of RM350 million per annum putting downward pressure on water tariffs. The financial surplus could be diverted to capital expenditure (capex) to reduce reliance on public taxes.

Non-domestic users (industry, construction and commercial) represent about 13% of water accounts but consume 39% of water demand within the peninsula2.

The higher revenue contributions from the non-domestic users ensure the financial sustainability of water operators. However, Selangor (including KL) and Johor have nearly half of all non-domestic users in Peninsula Malaysia leaving the other 9 states at a significant financial disadvantage.

Merging multiple state water operators into a singular peninsula-wide water operator is in line with the spirit of our Federation which is “Bersekutu Bertambah Mutu”.

Issued by

SHARAN RAJ
National Coordinator
Bureau of Environment & Climate Crisis
Parti Sosialis Malaysia (PSM)
&
State Secretary
Parti Sosialis Malaysia Negeri (PSM Melaka)

1 https://www.span.gov.my/document/upload/jLIiaYIqUdYiXDYBKJins6A7iW52LcOe.pdf Pg 27

2 https://www.span.gov.my/document/upload/jLIiaYIqUdYiXDYBKJins6A7iW52LcOe.pdf Pg 17-18

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