The Malaysian Insight

PENANG will continue its water subsidy for domestic consumers, but the amount will be reduced, the state government said today.

Chief Minister Chow Kon Yeow, who chairs the Penang Water Supply Corporation (PBAPP), said the subsidies paid for the last two years were unsustainable, considering the corporation’s plan to invest RM501 million in water engineering projects from this year to 2021.

In 2017, PBAPP spent RM79.6 million on domestic water subsidy, and RM83.6 million last year.

The subsidies had allowed PBAPP to charge domestic consumers only 32 sen per 1,000 litres for the first 35,000 litres of water they use.

“The RM163.2 million in subsidies are not sustainable because of the projects we have to carry out to ensure water security and no-rationing towards 2050.

“It is not simply because we want to increase the tariff. If we pay high subsidies, PBAPP will have less to spend on important projects,” Chow told a press conference earlier today.

The state has been explaining why Penang has to increase its water tariff, which is 116% below the national average.

Yesterday, PBAPP announced the 12,000km Butterworth-Penang Island Twin Submarine Pipeline, which cost some RM120 million; the Sg Perak Raw Water Transfer Scheme; water treatment facility upgrades, and non-revenue water management projects. Revenue gained from the increased tariff would fund the projects.

It is widely known that water is cheapest in Penang. In Terengganu, domestic users pay 52 sen per 1,000 litres for the first 35,000 litres while those in Johor pay RM1.31 – 310% more than what Penangites pay.

Chow said the state was not removing the subsidy, but was only seeking to reduce it.

He said PBAPP had submitted a water tariff review proposal to the National Water Services Commission (SPAN) to reduce its domestic water subsidies and increase revenue from trade consumption to fund planned water supply engineering projects.

PBAPP chief executive officer Jaseni Maidinsa said the corporation was asking to reduce its subsidies progressively to a more manageable amount.

“It is too high now, even more than PBAPP’s net profit, which is only between RM30 million to RM40 million.

“It doesn’t make sense in any business venture. If we pay so much each year, in the long-run we will be forced to take loans and pay interests. It will burden the people in the end.”

Jaseni also said all water supply operators could review their tariffs every three years and propose the water engineering projects they want to undertake.

SPAN, he said, was also looking to standardise the water tariffs nationwide to ensure the charges paid by the people would be fair.

Last week, the federal government announced that water tariffs may be increased nationwide to protect consumers’ interests in getting good quality water and ensuring the services of industries. – January 15, 2019.