Wednesday, February 26, 2014

How a Nation Like Malaysia Can Avoid Water Shortages

Iguassu Falls, Argentina/Brazil

It will be a shock for Malaysians to realise that Selangor will enforce water rationing by the end of February 2014.
This will have a major impact on investors and also productivity as households and factories have to cope with an interrupted water supply. The idea of having to store water in buckets and other containers sounds rather third-world so we should examine how this water fiasco has managed to develop.

There are three main players in the water saga.

SYABAS controls the treatment and water distribution of the state. It was created by the authorities in a privatisation deal that many feel is not fair to consumers.
SELANGOR authorities who have to work with SYABAS to supply water to the treatment plants, mainly from rivers.
SPAN is the Water Commissions Board that has authority to manage water resources.

This article from The Malaysian Insider explains how we have been "taking-water-for-granted"
According to the article, "Our archaic water pipes have been left unrepaired for decades and this has given rise to leaking pipes and wastage of precious water, as highlighted by our unrealistically high non-revenue water ratio of 36.4%. Some 1,994 billion litres of water was lost in 2012. By comparison, the non-revenue water ratios of Japan and Singapore are only 3% and 5% respectively."

This means we are losing more than 10 times non-revenue water compared to the two nations.
For every 100 cubic meters we treat and pump, 36 cubic meters are lost! It was also reported elsewhere that the SYABAS CEO enjoys a salary package of about RM600k per month but in any other company with such losses, the Board of Directors would probably remove him.

After the 13th General Elections when the Pakatan won Selangor state, the lack of good working relationship between SYABAS and SELANGOR authorities has caused the water supply system to degenerate.
SELANGOR wants control of the entire system but SYABAS is holding out for a higher price. Now even in a water shortage crisis, it seems the three parties cannot come together to work out problems. Instead we get the blame game blasted via the media.

As a resident of Johore, I have experienced this privatisation process or some prefer to call it PIRATISATION. First of all, there was an IPO about 10 years ago with the usual blurb by merchant banks about Johor state wanting residents to OWN a part of the water supply system.
Within 4 years, there was a MGO and investors were advised to sell and invest elsewhere to get better returns and during the period, not a single SEN was paid as dividends. Yes, the company was also taken private.

I believe the ENTIRE water supply chain should be under the control of states and not sold to a third party. However, the state can allow companies to take up a minority stake in the state company to provide management resources. In this way, consumers will not be held to ransom by conflicts of interest.
With this scheme, residents will know where to vent their anger when the taps run dry.
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