KUALA LUMPUR: Association of Water and Energy Research Malaysia (AWER) believes that the Selangor government’s impending takeover of Syarikat Pengeluar Air Selangor Sdn Bhd (SPLASH) could have an impact on the state’s water tariff rates.
AWER president, S Piarapakaran, said with all companies structured under Pengurusan Aset Air Berhad (PAAB), there will be debts which need to be settled.
He estimated that the water tariffs could go up by a single digit to enable Pengurusan Air Selangor Sdn Bhd (Air Selangor) to repay its debt to PAAB, taking into factor the rising costs involved.
“Admittedly, canceling concessions will lead to lower costs but Air Selangor has to make (debt) repayments to PAAB, thus increasing costs. If the tariff is not raised, there will be outstanding costs because a takeover involves assets, equity and then liability.
“Equipment, workforce, minimum wage implementation and material costs already encompass one third of the operational costs. In addition, water treatment plants use electricity to operate. Electricity costs have already gone up.
“There will definitely be a rise (in water tariffs) unless Air Selangor is only looking at a 0.1 per cent profit. But that’s highly unlikely as it is a business; no one wants to operate a business this way,” he told NSTP.
On the savings gained following the termination of concessions, Piapakaran said Air Selangor will pay RM1.9 billion to SPLASH, while the remaining RM650 million will be repaid over a nine-year period by PAAB.
He noted that it is proper for PAAB to be shouldering the debt and not the state government.
“This is the right way to do restructuring. When an assessment is done, the cost has to be borne by PAAB, meaning that the assets have to be mortgaged under PAAB. The assets are returned once the payment is settled.
“When all concession agreements with the four companies – SPLASH, Konsortium ABBAS, Puncak Niaga Sdn Bhd (Puncak Niaga) and Syarikat Bekalan Air Selangor (SYABAS) are terminated, this also spells an end to bulk purchasing of water.
“All treatments and supply will come under a single company. There is no need to pay one sum for treatment, and another for supply. So, we see savings made possible in this respect,” he said.