SPEAK UP! :: theSun Says

Water tariff hike difficult to swallow

The proposal to increase water rates by 15% for users in Selangor who consume more than 20 cubic metres a month is bound to raise the ire of the public, especially since many issues related to water are yet to be satisfactorily concluded.

In particular, it seems rather unfair that consumers have to bear the burden of a reward to Syarikat Bekalan Air Selangor (Syabas) under the concession agreement which allows Syabas to raise tariff rates by 15% if it manages to reduce non-revenue water (NRW - water which is stolen or lost through leakage) by 5%.

As has been pointed out by the Coalition Against Water Privatisation, government money has also been used in the reduction of NRW and therefore it may not be right to compensate Syabas. The coalition said that a RM2.9 billion payment was to be made to Syabas under the concession agreement.

Also one could argue that any reduction of NRW would be a corporate objective of Syabas anyway as it can get more revenue from the sale of extra water to those who have been stealing them previously. Also, reducing NRW will mean that less capital expenditure will be required in future to develop new water resources. All these are bound to improve Syabas' profits too.

Part of the problem is that some of water concessions, as with concessions elsewhere, may have been a bit too rich in terms of the favours they give to concessionaires. In the case of Syabas, this has taken the form of a substantial increase in water rates for just a 5% reduction in NRW.

When we consider that NRW was as much as 40% in some cases, a 5% reduction from such a high base rate may not be much. However a 15% increase seems to be a rather high reward for helping to reduce a high degree of wastage by just 5%.

Also, the current water policy is in the midst of a major review by the government which will substantially change the way water companies operate in Malaysia. It would be much better to wait for this to take place and then attempt to set new rates throughout the country.

One must remember that part of the problem in water management and the setting of tariffs is the inefficiency of water companies. This has not improved with privatisation and the most efficient water company in Malaysia is the state-owned one in Penang which supplies water to consumers more cheaply than most other water companies or authorities.

The government should examine how this company has managed to keep rates down, profits up and consistently maintained water supply that is clean and reliable. The others should be urged to emulate the example instead of raising rates to solve their problems and burdening the consumer instead.