KUALA LUMPUR (April 25): Malaysia requires an annual allocation of at least RM10 billion for the next three years, which is crucial to boost water infrastructure amid below-cost tariffs and high wastage, the National Water Services Commission (SPAN) said on Thursday.

“Infrastructure development in both the water and sewerage industries are at critical levels, and must be addressed immediately to support the increase of the treated water reserve margin,” the commission’s chairman Charles Santiago said in his address at the SPAN’s ESG Conference.

Existing revenue is insufficient to even cover operational and capital expenditure, Santiago said, noting that the environmental cost of services is, therefore, not met within the tariff structure.

“Low water tariff is a barrier for the industry to move forward in a sustainable direction, and so, it is crucial for us to explore sustainable financing mechanisms,” he stressed.

For years, Malaysia has been grappling with high non-revenue water — the percentage of treated water that fails to reach consumers, and fails to be billed — which requires massive investments for everything from repairing leaking pipes to replacing non-functioning meters.

About one-third of treated water is wasted due to leakages and other factors, with losses from non-revenue water having reached an estimated RM2.18 billion in 2022, or RM8.05 billion from 2018 to 2022, Santiago said.

The government has to tackle the non-revenue water issue and adjust tariffs to ensure “equilibrium of our water sector,” Santiago said, adding that reducing non-revenue water would lead to building fewer treatment plants.