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Merging Water And Waste-Water
Industries Will Bring Economies Of Scale
26/03/2007 Bernama
SHAH ALAM, March 26 (Bernama) -- The possible merger between the water and
sewerage industries as envisaged under the Water Services Industry Act 2006
(WSIA) may bring potential benefits to the country because it allows
management by a single entity and economies of scale in terms of operation,
said General Manager of Indah Water Konsortium (IWK) Ir Muhammad Haniffa
Abdul Hamid.
At present, IWK provided sewerage service to 86 of the 144 local authorities
in Malaysia, which was still not in a holistic manner, while the sewerage in
other local authorities were still managed on a ad-hoc basis, he said in his
paper "Sewerage Development in Malaysia - Past , Present & The Future," at
the Conference on Managing Challenges Towards Sustainable Water Resources &
Environment, here Monday.
The two-day conference which began Monday was organised by the Malaysian
Institute of Strategic and International Studies (ISIS) and the Water
Association of Selangor, Kuala Lumpur and Putrajaya.
The merger between water and sewerage industries might see the drawing up of
integrated operating plans to ensure the quality of water resources for
treatment and consumption meet certain standards as well as the quality of
effluent released back to the water resource, he said.
Besides, the current problem especially that of collecting sewerage service
might be reduced as full cost recovery might be achieved through integrated
billing of water and waste-water to consumers.
Haniffa said currently, the tariff structure of IWK was inadequate to
recover operation and maintenance cost of the company and the capital
expenditure was currently borne by the government.
For example the average tariff of IWK was between RM24 to RM96 per year,
whereas Singapore charged S$144.00 ( RM331) and Bangkok charged Baht 1,260
(RM115) a year for sewerage services.
He added WSIA also offered possible resolution to certain critical issues
for the sewerage industry such as billings and collection, refusal for
individual septic tank dislodging service and maintenance of private sewage
treatment plans.
On the future structure of the industry, he said there might be three
different form of entities in this sector -- the water-plus sewerage
company, water-only company and sewerage-only company .
However, he said water and sewerage company might immediately enjoy the
benefit of sewerage collection through water bills and possible cost
rationalisation, whereas sewerage only company could suffer from loss of
cross subsidies.
The water and sewerage company would have a matching customer database
between water and waste-water services enabling them to have potential
economies of scope and sharing billing costs between water and waste-water.
-- BERNAMA |
