Minister: Government not asking the impossible of utilities firms

  • Business
  • Tuesday, 27 Jul 2004


THE Government was not asking for the “impossible” when it asked water operators and independent power producers to renegotiate their terms of agreement under the current structure of its privatisation scheme. 

Water, Energy and Communications Minister Datuk Seri Dr Lim Keng Yaik said the Government was merely asking the players in these two sectors to consider a new holistic structure in the utilities segment to make it more financially viable. 

“Many banks have come forward to offer their expertise to finance such projects and this shows that utilities projects are bankable,” he told a seminar in Kuala Lumpur yesterday. 

The Government was expected to invest RM50bil over the next five years to improve water and sewerage services, he said, adding that the amount was a third of the total to be spent under the 9th Malaysia Plan. 

He said given the huge investment, it was the ministry’s objective to establish a new model for the utilities sector, which would attract private investment and enable the industry to be self-financing and able to deliver to consumers first-rate service at a reasonable tariff. 

For the water sector, the Government had studied the model in Britain and concluded it would not allow the industry to be privatised on a piecemeal basis as it would lead to inefficiencies, Lim said. 

Datuk Seri Dr Lim Keng Yaik

Following the British model, the Government would also use the proposed National Water Commission to regulate any price increases as well as ensure that any such rises were done in a transparent manner. 

“In Britain, the regulator reviews, challenges and amends the water company's business plans based on how the industry can be run efficiently,” he said, adding that the Government would also compare each company's plan with that of other operators, thus providing competition in an otherwise monopoly. 

Lim also pointed out that a strong water sector could develop the capital market, particularly the debt market. “In an effort to source for cheaper finance, companies have gradually moved from bank debt to the bond market,” he said. 

As for the power sector, the Government would want to know how the industry could be more effective without affecting the tariff. 

“For Tenaga Nasional Bhd (TNB), the Government hopes the new chief executive officer can put the house in order,” he said, adding that to be efficient, TNB would have to look at all areas of its operations, such as power generation, transmission and distribution. 

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