Water tariff hike step in right direction, says Kian Ming

A FORMER deputy minister said the recent water tariff increase is a step in the right direction in improving the regulatory structure of water supply in the country and ensuring continued financial sustainability of the water service sector in Malaysia.

Ong Kian Ming said even after the upward revision of the water tariff, Malaysia enjoys one of the lowest water tariffs in Southeast Asia.

On January 17, the Water Services Commission of Malaysia (SPAN) announced that the water tariff in Peninsular Malaysia and Labuan would increase by an average of 22 sen from RM1.43 per cubic metre to RM1.65 per cubic metre.

SPAN said that the adjustment in water tariffs will be implemented according to the Tariff Setting Mechanism (TSM) for domestic category users.

This adjustment is expected to impact approximately 6.9 million users in the domestic category, representing 86.6% of the 7.9 million account holders.

Ong, who is also a former Bangi MP, said the federal and state governments can play their part to cushion the impact of the water tariff hikes by providing targeted assistance to poorer households.

“For example, the Selangor state government recently announced that it will absorb and bear the water tariff hikes for over one million residents, covering almost 300,000 accounts that are recipients of the Darul Ehsan Water Scheme (SADE) aimed at the B40 community.

“This initiative will cost the Selangor state government an additional RM6.5 million annually, with expenditure rising from RM31.8 million to RM37.3 million.

“At the same time, the federal government recently announced an increase in the assistance to households that are in the hardcore poor category through the Sara programme where the assistance has been increased from RM600 in 2023 to RM1,200 in 2024,” he said.

While SPAN is allowed to revise the water tariff every three years under the TSM, Ong said more needs to be done to restructure the water industry in Malaysia.

“These include offering incentives for state water authorities to reduce non-revenue water (NRW) as part of the conditions which have to be met to increase water tariffs.

“The relevant authorities must also come up with creative strategies and regulations to tap into new sources of water supply such as drawing on rivers and underground water sources for industrial water supply, which has a lower processing cost,” he said.

Ong said there is also a need to access new sources of financing from foreign investors and international funding organisations to increase water processing capacity, especially in the poorer states like Sabah and Kelantan.

“With these additional initiatives, the rules and regulations with regards to the supply of water and the financial sustainability of the water agencies which supply the water will be improved significantly,” he added. – The Vibes, January 22, 2024