GEORGE TOWN: Penang will have to fork out RM510,000 a day to Perak on top of another RM210mil a year in capacity charges to get treated water, but it is a price the state is ready to pay.
Both the state government and NGOs accept that for water-scarce Penang, paying up is the only solution.
The state expects to buy at least 300 million litres of treated water a day starting from 2031, at RM1.70 per cubic metre.
Additionally, Penang must pay RM210mil a year for 40 years as a capacity charge, state infrastructure committee chairman Zairil Khir Johari told the state assembly yesterday.
He said a Perak State Development Corporation-Gamuda consortium would finance and build the entire package, after both states finalise a bulk water supply agreement within six months.
The 40-year payments cover construction costs and financing.
“We found the pricing to be very competitive, and the cost of getting treated water from Perak has been spread across 40 years,” he said.
For comparison, Penang’s domestic tariffs since 2024 average 86sen per cubic metre for the first 35 cubic metres. Non-domestic users pay RM1.57 per cubic metre for the same tier.
Penang has little choice but to pay up, says the Consumers’ Association of Penang (CAP), which called for long-term conservation steps to prevent tariff hikes.
Its president Mohideen Abdul Kader said the state’s water resources were constrained by non-revenue water losses, ageing infrastructure, climate change and dependence on federal funding for capital expenditure.
“Consumers must practise water conservation. Penang cannot rely solely on Sungai Muda,” he said, calling for more rain harvesting efforts and harnessing of grey water for gardens and toilets.
Penang Ratepayers Association president KN Lee also stressed on more efficient ways to manage water including better maintenance of old pipes and slashing non-revenue water loss.
“Parks and neighbourhoods can include mini reservoirs.
“These steps will help ease shortages and protect us from higher tariffs,” she said.
Small and Medium Enterprises Association of Malaysia (Samenta) said although SMEs worried over higher tariffs from the Perak-Penang water deal, the move would benefit South Seberang Perai district.
“Improved water supply, even at a higher cost, can spur development especially in Batu Kawan and the coming Silicon Island project off Penang island,” Samenta northern region chairman Calvin Kwan said.
The state has long relied on Sungai Muda, which it shares with Kedah, but limited water sources and ageing pipes have made it hard to maintain stable pressure at places like Nibong Tebal on the mainland and Balik Pulau on the island.
The Perak-Penang water deal is seen as crucial for Penang’s water security beyond 2030.
Meanwhile, the state has tabled the lowest deficit in its history with an estimated shortfall of about RM19.92mil for Budget 2026, a drop from RM33.63mil this year.
Chief Minister Chow Kon Yeow said total revenue was RM1.068bil, with tax revenue estimated at RM269.78mil, non-tax revenue at RM699.69mil and another RM98.56mil from non-revenue receipts.
He said operating expenditure for 2026 would amount to RM1.051bil, with emoluments taking up RM226.73mil.
“With total expenditure at RM1.088bil against revenue of RM1.068bil, the state posts a deficit of RM19.92mil, the lowest ever recorded,” he told the state assembly.
“Major development commitments include land acquisition for the LRT Mutiara Line, Gurney Bay Phase 2, Silicon Island works and other components under the Penang Transport Master Plan,” he said.
