SELANGOR WATER COMPANIES: Be dictated by what’s best for the rakyat

Posted by SM Maulana
Thursday, 12 June 2008

By : DATUK RANDHIR SINGH JOHL for Selangor and Wilayah Water Watch, NST

SELANGOR and Wilayah Water Watch (S3W) is shocked to learn that the previous state government had intentions to consolidate Selangor’s entire water treatment and distribution industry through Kumpulan Darul Ehsan Berhad (KDEB), which is a state-owned company that already has shares in all of the three water treatment companies and also the water distribution company.

The consolidation exercise is of concern as the previous state government was witness to the hardship faced by the rakyat due to the shortcomings of Jabatan Bekalan Air Selangor (JBAS) and later its corporate entity Perbadanan Urus Air Selangor (Puas) in managing and delivering water services in Selangor.

During this period, the previous state government owed billions of ringgit to the water treatment companies and the federal government. It was losing millions of ringgit due to high levels of non-revenue water. Customer service was far from desirable and there were daily complaints of disruption of water services and poor quality water.

Hence in 2005, after much public debate and deliberations, the previous state government privatised water services to Syarikat Bekalan Air Selangor and things have certainly improved. In addition, the lifeline tariff for the first 20 cubic metres has remained the same at RM0.57 sen per cubic metre despite privatisation.

Furthermore, most of the present water assets belong to the Selangor government and have been leased to the present water operators through concession agreements. Hence, the entire water industry consolidation exercise would merely translate to KDEB buying over the existing business (right to use the assets) from the present operators for billions of ringgit. The water-assets management company may at a later stage, as part of the national water and wastewater industry consolidation exercise, buy these assets from KDEB. Again, the mechanics of this entire exercise are unclear.
However, it is clear that the shareholders of the present water operators will get billions of ringgit at the expense of KDEB and the rakyat. KDEB would have paid billions of ringgit to the operators to buy the rights to use the assets, that is, the concession agreements, in order to get a licence from the National Water Services Commission and become the only water player in Selangor.

Hence, this exercise will be retrogressive as it will be similar to the situation when water services were under the jurisdiction of JBAS or even Puas. The state water industry will move towards being a state water monopoly and monopolistic environments seldom benefit the consumer. There must be free and fair competition where market forces will ensure industry efficiency, competitive water tariffs and better utilisation of water resources.

S3W, therefore, urges the present state government to exercise caution in implementing the previous state government’s intentions of consolidating the water industry and to listen to the rakyat first before it makes any decision on the matter, as the exercise might not be beneficial to the rakyat.

S3W is embarking on a survey to get feedback and input from consumers on KDEB’s intention to consolidate the water industry, and we urge the state government to also hold an open forum on the issue to get the rakyat’s feedback on the water consolidation exercise. This will definitely go a long way towards ensuring accountability and transparency.

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