‘Water rates need to be hiked’

KUALA LUMPUR: Water tariffs may be increased, and soon.

National Water Services Commission (SPAN) chief executive Mohd Ridhuan Ismail said water rates now were only enough to cover operators’ running costs.

“Even then, every year you’re going to get some increase in electricity, operations costs ... you need a cycle of tariff increase,” he said.

He said operators ideally needed to have tariffs that could cover not only their operations but additional works, such as changing pipes. “Until this full cost recovery arrives, you have to increase the tariff,” he said.

The Malaysian Water Association, a grouping of water industry players, also wants the tariffs raised.

The industry lost 12 sen per 1,000 litres of water produced in 2013, said association president Syed Mohamad Adnan Alhabshi, adding that industry players had been suffering losses since 2011.

Many can barely cope with the growing demand for water, he said.

“Tariffs must be adjusted so that we can cover operational costs, replace aging assets such as old, leaking water pipes, and handle inflation and finance costs.

“These costs keep increasing over time while old pipes are not being replaced due to insufficient funds,” he said.

In 2013, the water industry recorded a combined loss of RM429.7mil.

He warned that treatment plants could be closed down if the losses become too much for industry players, leading to supply disruptions and more water rationing exercises.

The association called for tariffs to be raised over the next 10 to 20 years, warning that not doing so would mean service disruptions for most consumers.

Syed Mohamed said the domestic water bill should be about 1% of a household’s total income.

If realised, this means that in 20 years the average bill for a family living in Selangor would be more than RM80 – an increase of about RM50 on the current average.

Six states have not changed their tariff since the 1980s and 1990s. Sabah and Labuan have had the same water prices since 1982 while in Pahang it has remained unchanged since 1983.

Penang raised its tariff from April. Domestic users there now pay an average of 16.7% more for their supply.

Domestic consumers accounted for 61.5% of all water usage in the country in 2013 – or 6.06 million litres a day.

Non-domestic users, such as industries, consumed 3.79 million litres a day that same year.

There are some 44,000km of old asbestos-cement water pipes that need replacing in the country.

It was previously reported that replacing 1km of such pipes would cost about RM500,000.

Penang Water Supply Corporation general manager Jaseni Maidinsa said industry players have been able to survive the losses so far because of non-domestic consumers.

He said businesses and factories paid higher water tariffs compared to that of domestic consumers.

“We are cross-subsidising (the domestic side) with (what we get from) the business sector. That is how we survive,” he said.