RANHILL Bhd is seeking Government assistance in providing water concession companies a longer loan period and allowing for the revision of water tariff to make the water concession and management business more viable.
Ranhill president and chief executive Tan Sri Hamdan Mohamad said utilities projects were long-term undertakings and required innovative financing structure.
“The more important issue is for the local water industry to shift from being a subsidised one into an economically viable undertaking,” Hamdan said at a media briefing on Ranhill and Ranhill Utilities Bhd's participation in the Asiawater 2004 Expo and Forum in Kuala Lumpur yesterday.
Hamdan said that utilities companies in Britain could obtain loans for up to 30 years with low interest rates, while the US Government allowed the issuance of utilities bonds that could be extended up to 40 years.
“All our bonds have to be paid off in 10 years and our commercial loans in 15 years.
“The least the Government can do is to create the infrastructure for long-term financing,” he said.
Ranhill Utilities' wholly-owned subsidiary, SAJ Holdings Sdn Bhd, has a 30-year privatisation concession to supply treated water to 2.2 million consumers in Johor.
Hamdan said Malaysia's water tariff should be increased gradually to reflect its cost of production.
He said that Malaysians should be able to pay more for water as the average personal income had been increasing over the years.
The higher tariff rates would discourage consumers from wasting water.
Ranhill Utilities chief executive officer Ahmad Zahdi Jamil said huge loans with short-term maturity period would place financial pressure on the water concession companies.
“This will ultimately burden water consumers as the higher costs will have to be passed to someone else,” he said, adding that the co-operation between the public and private sectors was vital in ensuring the success of the water privatisation programme.
Ranhill chief financial officer Amran Awaluddin said revenue should at least match the cost for treating and producing water.
“Dams constructed for the water industry can last for 100 years and we cannot be expected to pay off the investments in 15 years,” he said.
The four-day exposition and forum at the MINES International Exhibition Centre, Seri Kembangan, begins today and ends on Friday.
The event, which will also showcase local expertise in water treatment and management technologies, is expected to attract over 9,000 participants and trade buyers.