Is Privatising PUAS Viable?

PUAS Dilemma

Urgent Need to solve water woes in Selangor

Refering to the NST article posted by AS Toh & LCC in the Letter to the Editor on November 4, 2004 pertaining to the problems besetting PUAS and the Selangor water woes, it had been suggested by the author that as a temporary solution, the Government should:

1) Continue to put on hold water supply privatization deals;
2) Federal Government to provide soft loans or grants to the Selangor State Government to tide over the difficult period until a permanent solution is found; &
3) Increase immediately tariff not by 2 to 4 sen but by 20% to 40% as required.

The proposal was meant to be temporary until a permanent solution is found; according to the author.

The Poser is:

What is temporary? When will the permanent solution be found?

The problems of PUAS was known and discussed within the government for more than 10 years and many solutions were forwarded and implemented including the increase of water tariff. Did the solution solve the problem - NAYs! Why??? Because the problem of financial losses and debts was not the root of the problem. Then, what was the root of the problem?

Firstly, the problem arises due to water shortages. This was a direct result of the failure to plan for the need of the State in the blueprint. 20 years ago, there had already been a proposal to built the pipeline to deliver water from Pahang to Selangor. The proposed project to be funded by the Japanese was put on hold primarily for reason of financial constraint and priority. But we spent billions to built Twin-Tower, KLIA, Putrajaya, Cyberjaya, and many highways around the country which would had been construed to be more important than the water project. PUAS CEO Datuk Mohd Sinon Mudzakir had repeated mourn publicly that "The Inter-State Water Transfer Scheme needs to be realised urgently or Malaysians will face a water crisis in 4 years. A system allowing water to be delivered to States lacking in the resource needs to be in place. There will be a crisis by 2008 if it is not implemented quickly,” Did anyone in the Cabinet respond to his SOS call? The respond by Dr Lim Keng Yaik was blinker-focussed on the privatization of the whole water management services but will never address the supply-side which ultimately will surface soon, maybe in 3-4 years time, as projected by PUAS CEO. Looking at the perspective of solution-making, the Government will not solve the water problem until the long-term needs of water for the State was addressed with a long term solution; but the State Government had implemented many other solutions. They privatized the treatment of water to various companies and the contract price was a fortune to the consortium as acknowledged by PUAS. Apart from the pricing, the methodology of billing and metering the quantities of treated water was far too advantages to the consortium. What it meant is that the consortium will be paid for all the water that leaves the treatment plant but PUAS will receive revenue for what was actually delivered and consumed by household and industry. The pilferage and wastages in-between the 2-point of measurement is borned solely by PUAS. And, if you (Consortium) bill me (PUAS) 1 gallon of water at treatment plant out-point valve and meter, how do I check and confirm that it was actually 1 gallon - i.e. what is the Control System and how do we audit? Are you sure the current system is adequate and sufficient to ensure nobody can abuse the current recording system of delivery?

Apart from that, who is responsible for the pipeline and the leakages? We privatized the meat but left the bones for PUAS to chew and expect them to survive? PUAS didn't and so the next course of action is: THE PROPOSAL TO INCREASE THE WATER TARIFF TO COMPENSATE OR TO OFF-SET THE LOSSES. So, who was made to pay? The Rakyat!

The water tariff in Selangor is $0.57 for domestic and $1.80 for commercial. For domestic water tariff, Johor is $0.38, Perak is $0.30, Pahang is $0.37, Kedah is $0.40 and Penang is $0.22. For commercial tariff, Selangor is $1.80, Johor is $2.22, Perak is $1.20, Pahang is $0.92, Kedah is $1.20 and Penang is $0.52. And Penang JBA is making a sound profit. From figures above, Selangor is non-competitive and the question arises should be - WHY??? Is it due to poor management, high cost of poor quality, wastages, inefficiencies, ineffective policies, poor or no proper control system, poor maintenance management system, high cost of overhead, et al. Had the Government start pondering the above questions SINCERELY & TRUTHFULLY? There are many things known but not spoken publicly and those comments come from the sources within the system itself. Kleptorism was within but the issue was : It was actually desired!

ON PRIVATIZATION

Withholding privatization is not the answer. Privatization is a certainty but the National Water Commission must be setup and are fully equipped and operational to Man & Manage the system, i.e to PLAN, EXECUTE & MONITOR AND CONTROL the complete water supply and delivery services and includes the maintenance and repair management framework and that the system had considered the needs for the next few decades; otherwise, the solution to the problem begets new and more deadly problems.

ON WATER TARIFF INCREASE

Increase of water tariff by 20 to 40% will burden the rakyat and the consequences had to be considered thoroughly and wisely. The Hypothesis issue is: The consumer is made to pay for systemic failure, cost of poor quality, inefficiency and kleptorism.

ON SOFT LOAN FROM FEDERAL GOVERNMENT

Providing soft loans to PUAS is not the answer. It's is TINKERING with the problem. Give them $2 billion today and in 6 months time they will be broke again, and shall need another $2 billion injection.

Khazanah owns so many corporations, are cash rich, and were supposedly great and efficient managers. Why doesn't the Government consider a test on the management of Khazanah by privatizing the system (without tariff increase at least for the next 5-years) as a whole to Khazanah and find out how good the management are? Are they afraid to take the challenge and prefer to invest in safe and secured investments?

Petronas, another super-tycoon and had investments in so many sectors such as energy, should be considered to accept the responsibility of water management, which is also ENERGY BUSINESS. Their success is gains from raping Mother Nature, and water is Mother Nature too. Why are they allowed to suck black gold and not white gold? Even if they had to subsidies water from the gains from black gold, both assets of Mother Nature, isn't it fair?

The paradox is: Profitable business, I manage, complex, less profitable and high probability of loss business, you manage - that's what GLCs are about. And they claim they are great managers - MY FOOT!

Another PARADOXICAL THESIS: Since Penang water management had proven to be successful and efficient, why not bring the team of managers including their CEO to PUAS and let them turnaround the organization? I'm certain, they will succeed!

Policy-makers, planners and implementers would be wise to take heed of the recommendations contained in the National Water Resources Study (NWRS) plan which was submitted and accepted by the Government. The Government cannot plead innocence any more, if somehow, somewhere, the rakyat suffer from water shortages. A lot is at stake.