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Syabas should not be allowed to increase any water tariff on 1st January 2006 if it violates the30-year RM12.7 billion water privatization concession for Selangor/Kuala Lumpur/Putrajaya
Media Statement
(Parliament, Thursday): When the water privatization concession for Selangor/Kuala Lumpur/Putrajaya was signed in December last year, despite the earlier announcement by the Minister for Energy, Water and Communications Datuk Seri Dr. Lim Keng Yaik suspending all state water privatization until the establishment of the National Water Services Commission (SPAN), Keng Yaik said the concessionaire Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), will not be allowed to raise tariffs if it does not perform within the benchmark set by the government. Keng Yaik said there will be no automatic increase in water tariff as Syabas will be subjected to various parameters included in the tariff adjustment formula, such as actual expenditures for approved work programmes, actual revenue received and actual amount of payments for bulk water purchased from water treatment operators which comprise the first-tier adjustment in the process of tariff review. The quantum of tariff increase will also be further subject to the operating performance of Syabas based on two indicators – the percentage of non-revenue water (NRW) and distribution cost. It is commendable that there is the tariff review clause in the water privatization concession providing for a three-year review but no automatic increase if performance is not up to par. As Syabas wants to have its first water tariff increase of 15 per cent from 1st of January next year, the Federal and Selangor State Governments should exercise their rights in the concession agreement not to allow any increase in water tariff on 1st January 2006 if it violates the water privatization concession for Selangor/Kuala Lumpur/Putrajaya by procuring pipes from Indonesia to replace ageing water pipes in the Klang Valley instead of sourcing them locally in the first phase of the RM375 million pipe replacement programme. When the water privatization concession for Selangor/Kuala Lumpur/Putrajaya was signed in December last year, it was disclosed that RM11.73 billion would be spent on capital expenditure for new and replacement water supply infrastructures over the next 30 years and that the capital expenditures will be financed by tariff increases. However, in April this year, the RM11.73 billion capital expenditures for the next 30 years had been increased to RM12.7 billion. This is one of the issues which will be addressed by the parliamentary roundtable on water federalization and privatization to be held in Parliament, Committee Room 2 tomorrow at 10 a.m. Can Syabas be stopped from increasing its water tariff in Selangor/Kuala Lumpur/Putrajaya on 1st January 2006 if it violates the30-year RM12.7 billion water privatization concession as stated by Keng Yaik on Monday? Among those who have confirmed attendance of the parliamentary roundtable tomorrow are:
(09/06/2005)
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