THE Federal Government is allowing Selangor to operate the recently completed Labu treatment plant, possibly sending a signal that the water talks could move to more amicable ground.
“The Selangor government insisted on operating the plant; otherwise, it would not approve the extraction of water from Sungai Labu,” Minister of Energy, Green Technology and Water Datuk Seri Peter Chin tells StarBizWeek.
“The Sungai Semenyih plant is now overloaded in capacity by as much as 40%. We want to relieve it by rediverting the water that is presently used for the KLIA area.”
The RM232mil Labu plant supplying 105 million litres per day (MLD) will be like a dedicated plant for the KLIA region, bearing in mind that KLIA 2 will be coming up.
“We are now using the Labu plant to supply to the KLIA area and relieve Sungai Semenyih of overcapacity.
“We are now agreeing to allow the special purpose vehicle set up by the Selangor Government to operate Labu,” Chin says.
This is a plant completed and funded by water asset company Pengurusan Aset Air Bhd (PAAB).
“In a sense, we are acceding to Selangor's demand even though in the beginning, there was no agreement that it will be operated by Selangor on an operations and maintenance (O&M) basis with conditions and moderation of tariffs by the National Water Services Commission (SPAN) and distributed by Syarikat Bekalan Air Selangor (Syabas),” he says.
Shortage of treated water: Chin (bottom, left) points to signs that there is not enough water. For instance, in the recently forced scheduled maintenance, one million households were affected.
Rationale for acceding
In this case, the plant was completed at the cost of the Federal Government but the dire situation involving overloading of some plants in the region indicated that the Labu plant needed to be in operation as soon as possible.
Datuk Seri Peter Chin
“We don't want the day to come when consumers are deprived of water. (It is not right to have) a plant that is completed and yet not allowed to extract water.
“While the Federal Government is going to invest more under the two mitigation programmes (to ensure uninterrupted water supply), we realise that all these are efforts by the Federal Government to ensure that the people in the Klang Valley will not be short of water and those industries which are dependent on water supply will have their needs looked into, as promised by the Government when these industries were approved by the authorities concerned.
“We do not want the day to come when investors blame the Federal or State governments for not being pro-business or pro-investments,” says Chin.
“If the Langat 2 water treatment project had been approved, we would have breathed much easier.
“The year 2014 should be completion of Langat 2; now that it is not completed and we have to think of how to use Mitigation 1 and 2 as stop gaps until the day Langat 2 is finally approved,” he adds.
According to Chin, the whole project of the Pahang-Selangor water transfer has been instituted, approved and implemented.
“The Selangor government must realise when this project was implemented, the then Selangor government (under Barisan Nasional) had approved and signed everything that had needed to be signed.
On that basis, the project was implemented.
“Now halfway, the government has changed its view. Unless you do this... this... this... we are not going to approve the project.'
“This sort of decision puts a spanner in the works, causing a delay. Every infrastructure work is planned for a purpose. Deadlines are now being pushed away and there is always a possibility that something can go wrong.
“We are scraping the bottom of the barrel for water whereas we would have got it easily through the Pahang-Selangor interstate raw water transfer project. The tunnel is scheduled to be finished by July 2014, all ready to deliver water to a treatment plant which is nowhere to be seen,” he says.
Progress in restructuring talks?
The Federal Government's raw water transfer between Pahang and Selangor, as well as water treatment project at Langat 2 is stuck because of the inability to secure Selangor's go-ahead for the construction of the plant.
Selangor wants the water restructuring to go through first; however, there has been no progress so far.
In fact, a report on Monday quoting Selangor Mentri Besar Tan Sri Khalid Ibrahim said the state had “engaged a London-based legal firm to take on the Federal Government in its bid to regain control of the state's waterworks.”
“We are always amicable to look at the water restructuring exercise in a manner that will benefit consumers,” says Chin. “But the restructuring proposal has to be a workable one.”
Why did the restructuring not proceed smoothly?
“Because the four concession companies Puncak Niaga Sdn Bhd, Syarikat Pengeluar Air Sungai Selangor Sdn Bhd, Konsortium Abbas Sdn Bhd and Syarikat Bekalan Air Selangor have to be compensated. They have signed concessions (for 21 to 25 years) and Selangor wants to terminate these concessions by taking over.
“If Selangor had been able to conclude the negotiations, we would have agreed.
“But they failed. It has to an arms length, willing buyer willing seller type of negotiations. They must offer an amount that these companies feel comfortable with to exit. But that didn't come through.
“There is a lack of fresh proposals from Selangor. I am hoping Selangor comes up with more practical, implementable and sustainable proposals. They are just as responsible as us. Now it looks like they are watching and we are carrying the burden,” says Chin.
He points to signs that there is not enough water. For instance, in the recently forced scheduled maintenance where 220,000 accounts involving one million households were affected.
Under the scheduled maintenance to the Sungai Selangor Phase One, it had to do with changing the valve. “We had to stop a while to change. This is a sign that here is not enough water ... just because one plant has to be stopped, so many houses are affected.
“If I have the luxury of having enough capacity or a bigger reserve capacity, I can divert the water from other regions to this particular network served by this treatment plant.
“We are operating on a very thin margin for treated water, sometimes down to 3% when it is a hot day or a day before Chinese New Year when people are cleaning their houses. Any major breakdown in any of the pumping stations, we will be affected.
“The norms for reserve margin are around 8% to 10%. Now we are down to 3% to 5%.
“By 2017, if the treatment plant is not ready and built, there will be no other sources in the whole of Klang Valley,” he says.
Debate on water study
“Come out with the proof (that there will not be a water shortage by 2014, as indicated by a Federal Government study). Show it to the public that there is a sustainable water source.
“They are talking about pumping out water from mines, lakes, mining ponds, underground water which they think is available water.
“Underground water source is the last thing for raw water source. We have many rivers and rain water that we can use. Why we do have to pump underground water and use our mining ponds as reserve water?
“We have a source like Pahang which is ready to sell water to us; we pay a bit of royalty and that will last us till 2030 and beyond,” says Chin.
By the constitution, raw water source belongs to the state.
When Tun Lim Keng Yaik promulgated the Water Services Industry Act 2006 (WSIA), he had to change the constitution by making water supply a state and federal responsibility. Prior to that, it was basically the state via Jabatan Bekalan Air.
When WSIA was done, the state government agreed to allow this concurrent responsibility. Otherwise, there could be a state with water supply while others had none or not enough.
WSIA gave the responsibility to the Federal Government to build infrastructure like what PAAB is doing, providing a system in which the state becomes an operator and federal agency and PAAB becomes the owner of the assets.
“Selangor wanted this to be implemented and we agreed it can be done. But there are four existing concessions which must then either be forcibly nationalised or negotiated for a commercial buyout of their concessions.
“These days, people hardly talk of nationalisation. So you have to resort to commercial negotiations for buying out.
“We allowed Selangor to buy out. Go ahead, negotiate with them and buy them out. But they did not offer enough for these people to be comfortable to exit.
“You must find a solution for them to feel that they can operate within this particular framework. In Johor. we were able to get everybody to see eye-to-eye. As a Federal Government, we have no power to force anybody to give up concessions,” says Chin.
Reluctance to hike tariffs
“We need to look at tariffs. As long as water is cheap, the tendency is for consumers to use more than they should.
Selangor has one of the highest per capita for consumption of water; they offer 20 cu m of water free.
“Water resources are getting more and more costly; treatment plants are becoming costlier to operate. The chemicals used to treat our water, which formerly can be classed as Class One or Two, now have become Class Three.
“Pollutants have risen over the years. When your water is more polluted, you cannot rely on the traditional pebbles and sand permeation systems anymore. You need more chemicals and more sophisticated treatment systems to treat the water. The pollutant levels are getting higher and yet water tariffs remain static.
“The Government has to subsidise while the water quality gets worse,” says Chin.
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