[UPDATED] Any decision on water tariff increase subject to in-depth review: Nik Nazmi

KUALA LUMPUR – The government will initiate an in-depth study on possible tariff increase for residential premises and the non-domestic sector as part of the efforts to reduce the massive non-revenue water (NRW) issue.

Natural Resources, Environment and Climate Change minister Nik Nazmi Nik Ahmad said a thorough review and wide-range discussions are necessary before reaching any decision.

“Currently, the government undertakes various initiatives through the National Water Services Commission (SPAN) to reduce NRW, and the previous government acknowledges an increase in tariff for the non-domestic sector and looks at it overall.

“It (the decision) is not going to be immediately, as we have to do a thorough study, just like what we did with electricity tariff adjustment through the Imbalance Cost Pass-Through (ICPT) mechanism, where the transition is towards targeted subsidies,” he said after handing over the reimbursement to Pengurusan Air Selangor Sdn Bhd (Air Selangor) for its success under the National NRW Programme last year.

Nik Nazmi cited the phases of free water policy in Selangor over the years, “from everyone getting it to the B40 group getting the free water”.

He stressed that the tariff would continue to remain affordable, “but those who can afford to pay would be paying more, and that’s the principle and part of the solution”.

“You cannot talk about reducing the NRW and making it more economical if we do not talk about that part of the situation.”

Nik Nazmi revealed that recently, there were several states who had requested a review in their bids to reduce NRW.

“I am not going to mention names (of the states) requesting a thorough review to see how it’s going to be done.

“One state came to me that they want to look into that from SPAN perspective overall before we can make that decision,” he said, adding that the entire supply chain of the water industry should also be included in the review.

NRW is defined as treated water “lost” before reaching consumers with many factors that caused the loss are due to leaking or broken piping, faulty metres and theft.

According to SPAN, the nationwide NRW average rate last year was 37.2% which resulted in a loss of treated water of 7.084 million litres per day, estimated at RM2 billion annually.

Stating that the issue of NRW needs to be addressed through a holistic and continuous solution which requires huge capital expenditure, Nik Nazmi stated that the federal government has been providing grants allocation of RM1.37 billion to assist the utility companies.

“Some states have reached up to 60% of NRW, with the top three of the lowest percentage being Penang, Johor and Selangor between 24% to 28%, (compared to) some developed countries as low as 15%.

“To help overcome the challenges of financial constraints faced by water operators, the federal government has implemented the National NRW Reduction Program with the 11th Malaysia Plan (MP) and continued under the 12th MP involving a total allocation of almost RM2 billion.

“If the economic structure of the water industry doesn’t work then we are going to make small improvements. But it needs to be looked at as a whole.”

He congratulated Air Selangor for successfully lowering the NRW rate in 2021 to 27.8% from 33% recorded eight years ago and claiming 50% of the NRW program expenses amounting up to RM 111.9 million, bringing the total three-year reimbursement to RM362.4 million.

“The impact of Selangor's NRW level on Malaysia's average is huge. For example, if Selangor manages to reduce the NRW by 1%, it will contribute to a decrease of about 0.3% to Malaysia’s average NRW.

“This is because in terms of the volume of water demand, Selangor has the highest water production rate of around 5,000 million litres per day compared to the total production of 15,100 million litres per day for Peninsular Malaysia and Labuan,” the minister explained.

He also congratulated the utility company responsible for water supply in Johor, Ranhill SAJ Sdn Bhd for successfully achieving the NRW reduction target set in Johor two years ago.

“Ranhill SAJ has reduced the NRW rate by 1.6% to 25.1% and successfully claimed reimbursement of RM142.3 million,” he added. – The Vibes, March 7, 2023