Water deal a 'victory for people'

New Straits Times, 2 June 2011

PUTRAJAYA: Penang yesterday signed a water restructuring deal with the Federal Government -- a move which Prime Minister Datuk Seri Najib Razak described as a "victory" for the people of Penang.
This was because the deal, signed with Pengurusan Aset Air Berhad (PAAB), which is a state government-owned company, "will not burden the people, financially".

Najib said the deal "means a lot" as Penang was an opposition-ruled state.

He hoped that other opposition-ruled states -- Selangor, Kelantan and Kedah -- would follow suit.
"This collaboration between the federal and state governments will see that water is managed more efficiently and clean and quality water is supplied to the rakyat at an affordable price.

"This deal is an example of strong cooperation between two quarters for the sake of the state's development and well-being of the people.

"The interests of the people have always been the government's priority.

"I hope other states will also join this initiative for the benefit of the people," Najib said at the signing ceremony here, yesterday.

He added that the water tariff would be decided by the state government.

Present were Energy, Green, Technology and Water Minister Datuk Seri Peter Chin Fah Kui, Penang Chief Minister Lim Guan Eng and PAAB chairman Datuk Seri Mohamad Tajol Rosli Mohd Ghazali.

Penang became the fifth state to agree to a water restructuring initiative after Malacca, Negri Sembilan, Johor and Perlis.

Najib said the move would lead to rapid development in the state, especially the water industry.

He said the water restructuring initiative began in 2005 when the Federal Government amended the federal constitution to allow water supply and service to come under the purview of both the federal and state governments.

Under the agreement, Penang will be alienating a total of RM655.2 million worth of water-related assets to PAAB while the company will take over the state's water liability from the Federal Government for the same sum and lease the water assets to the Penang Water Supply Corporation (PBAPP).

The deal also allows PBAPP to either finance its water development via PAAB or separately.

Najib said the deal was the "first of its kind" as the water operator was granted both service and facility licences that will run until May 31, 2014. "This initiative proves that the Federal Government is serious in creating a holistic and efficient water industry in the state by taking into account all aspects, such as water demand, operations and financial stability."

Lim, meanwhile, said the state government would be given RM1.2 billion in grants to expand the Mengkuang Dam in Penang. Construction will begin in August.

Currently, the dam's capacity is 23 million cubic metres. The expansion will see the capacity increasing to 78 million cubic metres to meet the state's water needs until 2020.

The expansion project has been awarded to China International Water and Electrical Corp (M) Sdn Bhd.

Lim also said the current 20 per cent water conservation surcharge for excessive water usage would be reviewed by the end of the year.

He also promised not to increase the water rates for domestic users.