SYABAS and PUNCAK - Selangor Water Deal

Reduce Water Charges, Can They Do It?

The new Selangor Menteri Besar Tan Sri Khalid Ibrahim recently announced that the newly elected Selangor state government will make a move to give free first 20 cubic metres of water from April 2008 to all Selangor households.

The move was seen as a step to win the hearts of the Selangorian who have supported the loose coalition of DAP-PKR-PAS whom had took over the states in the recent 12-th general election. But, can Khalid make it?

The Water Services Industry Act, which will come into effect soon, is obviously a move to make the water assets re-nationalized and re-uniform by the federal government. Now, with the review process of the water concession in Selangor, it will affect the overall restructuring of water assets by the federal government throughout the country.

The federal government’s move to improve the efficiency of clean water delivery and bringing the state water agencies out of losses will be facing a tough power struggle crisis along with the (five) opposition states. The federal government may stop giving annual development grants and funds to the states. Table 1 shows the average domestic water tariff in Malaysia.

Table 1: Malaysia Average Domestic Water Tariff

No	States	RM/m3	Revised tariff year
1	National Average	0.645	-
2	Penang	0.31	2001
3	Terengganu	0.52	1997
4	Kedah	0.53	1993
5	Kelantan	0.55	2001
6	Sarawak	0.56	1984
7	Perlis	0.57	1996
8	Pahang	0.57	1983
9	N. Sembilan	0.68	2002
10	Melaka	0.72	2005
11	Perak	0.73	2006
12	Selangor	0.77	2006
13	Labuan	0.90	1982
14	Sabah	0.90	1982
15	Johor	0.90	2003

(Source: Jabatan Bekalan Air, Kementerian Tenaga, Air dan Komunikasi Malaysia)

The water concession contract between the federal government, state government, Puncak Niaga and SYABAS was signed in 2004 for 30 years until 2034. Puncak Niaga is a federal government entity that was responsible to restructure and nationalize the entire water supply chain in the country while SYABAS is the water supply agency in Selangor that suffer losses due to non-revenue water.

The tough challenges for Khalid would be first; to ensure that the new Selangor government is able to turn the state owned water agencies into profit making business without cross subsidies from the federal government.

Secondly, the water concession contract between the state government, Puncak Niaga and Syarikat Bekalan Air Selangor (SYABAS) was said to be strictly confidential and their company annual report were also barred from public viewing. Due to conflict of interest, it is doubtful that these companies will follow Khalid’s order to fully release their reports and financial statements.

The states civil servants is the third challenge that play an important role in deciding the effectiveness and efficiency in facilitating states development and management with the new state government. There are clearly opposing ideologies between having to run a profitable organization versus running along a state owned enterprise model that Khalid’s populist politic dictates.

Fourthly, If the civil servants are unable to adapt the Khalid’s administration style, their working efficiency rate will be reduced and eventually delaying the administration process. Some people also see the civil servants as a group that pro Barisan Nasional, and they are afraid that the new state government policies will not be implemented efficiently or worst, state civil servant mis-implemented the policies with their own countermeasures. The recent Taiwan’s Presidential election shows that the civil servant are still pro- Kuo Min Tang (KMT) even though they have voted for Democratic Progressive Party (DPP) in 2004 and that was one of that factor that helped KMT to regain power from the poorly performed DPP.

The fifth and the crucial obstacle that Khalid faced in reviewing and amending the states administrations will be the mutual agreement between PKR, DAP and PAS. Ideology for the (three) parties are totally different and their views on certain issues are totally dividing. It is certainly hard for Khalid to unify the different voices without any internal conflict as the strong echo voices from the administrator is the only way to bring the states goes forward.

“Selangor Rakyat’s” expectations for the new government certainly will be higher than the previous administration. If Khalid’s administrations are unable to perform to the expectation of the rakyat, their coalition will be dumped by the voters in the future terms.