THE government has assured that all additional revenue generated from state water tariff adjustments will be closely monitored and audited, with non-performing operators facing warnings, fines, shortened licensing periods, or even termination of their operating rights.
Responding to a question from Dato’ Mohd Isam Mohd Isa (Tampin) during Thursday’s Dewan Rakyat session, the Minister of Energy Transition and Water Transformation Datuk Seri Fadilah Yusof reiterated that while water is a state jurisdiction, federal mechanisms are in place to ensure accountability and service quality across Malaysia.
“Each state operates its own water utility company. The National Water Services Commission (SPAN) functions as the federal regulatory authority, facilitating tariff adjustment approvals and overseeing operators to ensure performance standards are upheld,” he said.
Fadillah explained that Malaysia’s low water tariff rates have long prevented many state-owned water utilities from covering capital expenditure (CAPEX) and operating costs.
“To guarantee clean water supply, tariffs are reviewed every three years. Recently, all states except Perak submitted adjustment requests, and SPAN approved them based on clear justifications,” he added.
However, approvals come with conditions. “When tariff adjustments are granted, operators must meet pre-set KPIs. If they fail to do so, they may face legal action — including fines or imprisonment — under existing legislation,” Fadillah, who is also the Deputy Prime Minster II, warned.
Prior to enforcement, SPAN issues formal warnings and allows operators six months to address any KPI shortfalls.
In terms of licensing, which is issued in five-year cycles, strong performers may be granted renewals for the full term, while underperforming utilities could see their licences reduced to one to three years.
“In some cases, poorly performing companies are only given one-year extensions. If there is no improvement, their licences may be revoked altogether, and state governments will be asked to appoint a more capable operator,” he said.
The Minister concluded by reaffirming that public confidence, infrastructure development, and service reliability remain key government priorities, with firm regulatory steps in place to ensure tariff proceeds are not misused. - August 7, 2025
