PETALING JAYA: The outlook for Selangor’s water sector is improving as tariff adjustments begin to strengthen the financial position of Air Selangor while industrial expansion, particularly from data centres (DCs), supports demand growth.
According to BIMB Research in a recent note, tariff revisions are improving Air Selangor’s financial sustainability, with breakeven expected by 2026, as rising investments in DCs are also strengthening medium-term water demand visibility in Selangor.
The research house noted that the pipeline of water infrastructure projects could also create opportunities for contractors involved in treatment plants and pipelines.
Air Selangor’s financial performance has already begun to recover following the tariff adjustment implemented in August 2025.
“The company recorded a net loss of RM610mil in 2024, which narrowed to RM303mil in 2025, and management expects the company to reach financial breakeven in 2026, reflecting the full-year impact of the latest tariff revision,” BIMB Research said after a recent meeting with the company’s management.
The improvement in finances comes as water demand in Selangor continues to expand, supported largely by industrial and commercial activities.
According to the report, demand for water in the state is growing at around 3% annually.
Industrial users remain the largest consumers of treated water.
“The commercial and industrial segment accounts for about 60% of total water consumption and revenue, while domestic consumption represents approximately 35% to 40% of demand,” the research house said.
A key emerging driver of demand is the rapid expansion of DCs in Selangor. BIMB Research noted that the sector is becoming an increasingly important source of water consumption.
“Management highlighted that DCs are emerging as a new source of incremental demand, with around 40 to 50 operators having registered projected water requirements amounting to approximately 350 million litres per day (MLD),” the report said.
Air Selangor currently operates a system with installed production capacity of about 6,300 MLD, while treated water sales average around 5,300 MLD, leaving a reserve buffer within the system. The utility is targeting a significant expansion of capacity in the coming years.
“Management targets to increase total system production capacity to approximately 8,000 MLD by 2030 through a series of treatment plant expansions,” BIMB Research said.
Several major infrastructure projects are already planned to support future demand.
These include the Rasau Water Treatment Plant Stage 1, which will add about 700 MLD of capacity by 2027, followed by Rasau Stage 2 between 2028 and 2029.
Other projects include Langat 2 Phase 2 as well as smaller plants at Labohan Dagang and Putrajaya.
The expansion programme is expected to require substantial capital spending.
BIMB Research estimates medium-term capital expenditure of about RM15bil, while the broader 30-year infrastructure development plan could total around RM45bil.
Such investments could benefit Bursa Malaysia-listed contractors.
“The capital expenditure pipeline suggests continued infrastructure investment in Selangor’s water supply system, potentially benefiting contractors involved in treatment plants, pipelines and non-revenue water reduction programmes,” the research house said, citing Gamuda Bhd
and Taliworks Corp Bhd among potential beneficiaries.
At the same time, Air Selangor is exploring alternative financing options for some projects given its relatively high gearing.
The company is considering structures such as Build-Operate-Transfer or concession models where private contractors finance and operate facilities before transferring them back to the utility.
Beyond infrastructure expansion, operational improvements also remain a priority.
Air Selangor aims to reduce non-revenue water to 25% by 2030 from 26.7% recorded in 2025 through initiatives such as pipe replacement programmes and performance-based contracts.
