KUALA LUMPUR: The government must take immediate steps to break Indah Water Konsortium Sdn Bhd's (IWK) operations into state-based entities and merged with respective state water companies in three phases until 2025.
Association of Water and Energy Research Malaysia's (AWER) propose the water restructuring exercise to be carried out with Phase 1 involving Selangor (Putrajaya and Kuala Lumpur), Johor, Melaka, Labuan and Penang to be completed by June 2022.
Phase 2 of the proposed plan to involve Kedah, Perlis, Perak, and Negeri Sembilan to be completed by the end of 2023 and Phase 3 with Kelantan, Terengganu and Pahang to be completed by the end of 2025.
Its president Piarapakaran S said with this move, water companies can optimise treated water, treated effluent, waste to wealth and business integration upon completion of the merger.
Further, the move would also improve state entities' control over environmental pollution and reduce water treatment costs, resulting in more equal water tariffs and a self-sustaining water services industry.
Piarapakaran was responding to the former water, land and natural resources minister Dr Xavier Jayakumar, who proposed the government review and consider increasing water and wastewater tariff rates.
While recently debating the 12th Malaysia Plan in the Dewan Rakyat, Xavier said Putrajaya was forced to pay IWK up to RM100 million a year to manage the wastewater system.
"For Budget 2020, where Xavier was also minister, RM181 million was approved to be allocated for state water operators as well.
"This is higher than the RM100 million IWK gets from the federal government. Was he not aware?
"IWK's current predicament is its own making because it failed to follow Water Services Industry Act 2006 (WSIA) model. If IWK followed the WSIA, they would not be in the current situation," Piarapakaran to The New Straits Times.
Piarapakaran also pointed out that Environment and Water Ministry (KASA) recently 'illegally' approved IWK's concession agreement extension.
"KASA is only allowed to end concession agreement and follow The National Water Services Industry Restructuring (NWSIR), but the ministry acted beyond the power vested upon them and went against the WSIA model that was developed after constitutional amendment approved by Conference of Rulers and Parliament.
"A mid-term commercial loan is about 15 years, and IWK will enter into new agreements to explore the conversion of wastes and wastewater into profits.
"These profits under the WSIA model must be ploughed back into the tariff. So, we only see 'hidden agenda' and 'vested interest' written all over IWK's concession extension. This must stop," Piarapakaran said, adding that IWK had made various attempts to extend the concession and to avoid being restructured under the NWSIR plan.
Initially, IWK's concession was set to expire on March 31, 2022, but KASA extended it for another 12 years on August 12, 2021.
"We need to implement the NWSIR to ensure water security is achieved. Any derailment will only threaten Malaysia's water supply security and will cost us more in the near future to mitigate arising problems," he was quoted saying in another news report.
When asked why the government and related agencies failed to address more pressing water issues, such as non-revenue water (NRW), Piarapakaran said AWER has been pushing for the formation of an NRW Reduction Task Force to implement the NRW Reduction Action Plan for the past ten years.
"After a few meetings and finalisation of implementation methods, we saw the rush to grab the control of NRW implementation.
"As inane as it sounds, that's exactly how things turn out. AWER set 20 per cent NRW for 2020, and the government set the target at 25 per cent.
"Our target was set based on World Bank's criteria for developing nations at 25 per cent and developed countries at 15 per cent.
We aggregated the developed nation status for Malaysia in 2020. We see that by 2025, the government will set the 25 per cent NRW target again, which is regressive.
"We need strict implementation based on critical, sub-critical and non-critical zones that projects are selected based on fast recovery and serious leakages using a matrix of connection per kilometre, NRW situation and output," he said.
Once NRW reduces, it becomes revenue to the water services industry that can be ploughed back to fund more NRW projects continuously, Piarapakaran said.