ISKANDAR PUTERI, Aug 13 — The Johor government’s proposal to set up a new water utility company is unsound, state Opposition leader Datuk Hasni Mohammad said today.

The Benut assemblyman asserted that establishing a new company will be costlier compared to taking over ownership of the existing water services operator SAJ Ranhill Sdn Bhd, as the previous state Barisan Nasional (BN) administration had proposed, in a bid to increase its stake.

"The establishment of the second water utility company will see the existing company making a loss and burden the state government. The situation can threaten the water industry in Johor,” he told reporters outside the Johor legislative assembly here.

Hasni was asked to comment on the state government's proposal to set up a new water company as announced by Menteri Besar Datuk Osman Sapian in the legislative assembly earlier.

Osman said the state would be better placed to control water tariffs in Johor by setting up a new company.

On the possible costs that were needed to set-up a new water utility company, Hasni replied that it will not be favourable for the state government either in the short or long term.

"Johor has about 21,000km of pipe lines and the revenue gained from each kilometre is around RM156 per kilometre.

"This figure is very much lower compared to those in Penang, which earns almost RM500 per kilometre of pipe line,” said Hasni, adding that such a move to establish the second water utility company for Johor would be unprofitable.

During the previous BN-led administration in Johor, Hasni was in-charge of the state’s public works, rural and regional development portfolio.

He was instrumental in the negotiations to increase the state government shares in SAJ Ranhill to reposition itself in Johor’s water management operations in terms of having power to control and obtaining rights in decision making relating to the water development in the state.