KUALA LUMPUR (Oct 29): The federal government plans to open up bids from the private sector as an alternative financing approach to help reduce the cost borne by the government to address the issue of high non-revenue water (NRW) in Malaysia, said Deputy Prime Minister Datuk Seri Fadillah Yusof.
Fadillah, who is also the energy transition and water transformation minister, said the majority of water-related projects in the country are still funded by the government. To ensure the survival and sustainability of the water sector, there needs to be a balance between public and private funding.
“We are opening up for the private sector to offer solutions to the government, including all the financing packages, in order for us to not only solve the issue that we are facing right now, but hopefully also fast track solutions in Malaysia,” he told a press conference following the launch of the Water Sector Transformation 2040 (AIR 2040).
“We are talking about replacing old pipes with new pipes. Our estimate, if the government is to spend on it, would cost us about RM10 billion,” Fadillah added.
NRW refers to clean water that has been produced but is lost somewhere in the water distribution system, and is not accounted for. The reasons for water losses vary, ranging from leakages, pipe bursts and poor water management to illegal connections and unauthorised consumption.
The minister said the national average of NRW is about 35% of total water supply, but there are some states that even breaches 50%. This, he said, is costing the government about RM2 billion annually in potential revenue.
Fadillah said the federal government will provide grants to help state governments with more than 40% in NRW to partly finance the projects that would address the issue. Meanwhile, states with less than 40% in NRW will be provided with matching grants.
“So if we can invite the private sector, they will then negotiate with the state government and the respective utility companies, to discuss the best business model that can be undertaken,” he said.
While there will be returns to the private companies involved, Fadillah assured that water tariffs will still be controlled by the government.
Malaysia aspires to be water hub for developing countries, Asean
Earlier, Fadillah launched AIR 2040, a national agenda to transform the water sector into a sustainable economic sector that can contribute significantly to the national gross domestic product, provide good, quality, affordable water to the rakyat, create job opportunities, and advance the development of science, technology, innovation and economy.
The roadmap will be implemented over 20 years through four phases under the Malaysia Plans. The first phase, which is currently being implemented under the 12th Malaysia Plan from 2021 to 2025, is focused on accelerating the adoption of Integrated Water Resource Management (IWRM).
According to the Global Water Partnership, IWRM promotes the coordinated development and management of water, land and related resources in order to maximise economic and social welfare in an equitable manner without compromising the sustainability of vital ecosystems.
Fadillah said water should no longer be seen as a purely public resource. “The potential of water to generate income is enormous. If managed efficiently, it can give maximum economic returns,” he said in his speech.
By 2040, the government aims for Malaysia to become a water hub for developing countries and the Asean region, as well as a global reference centre in terms of research and development, innovation and talent development.
“Through increased investment in water technology, research and skills development, we can make Malaysia a global centre of excellence in this field. This will directly attract foreign investments and help Malaysia create higher quality employment opportunities for the people,” the minister said.