PUTRAJAYA, July 28 — Water tariffs will inevitably increase after the Selangor state government resolves its water restructuring exercise next month, Dr Xavier Jayakumar said.

The water, land and natural resources minister said it was the only way for state-owned company Pengurusan Air Selangor Sdn Bhd (Air Selangor) to repay Pengurusan Aset Air Berhad (PAAB), a company under the Finance Ministry, for the acquisition of the remaining state water concessionaire Syarikat Pengeluar Air Selangor Sdn Bhd (Splash).

“The current tariffs’ rate is very low. It is a 20-year-old rate. Having said that, we are not talking about a 100 per cent increase, but a gradual one to bring out good quality supply of treated water,” Dr Xavier told Malay Mail in an exclusive interview this week.

He did not define what the quantum of increase should be as he explained that the increase should be in tandem with the acquisition of Splash.

“I cannot say how much the offer to buy over Splash is going to be as it will be on the basis of a willing buyer, willing seller concept,” he said.

Yesterday, Dr Xavier denied a foreign news report alleging the government would buy out Syarikat Pengeluar Air Selangor Holdings (Splash) for RM1.9 billion.

He said negotiations on the matter were still ongoing.

According to Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), the minimum payment for the usage of 35 cubic metres and above is fixed at RM6 for domestic consumption.

The Selangor government, however, has been providing 20 cubic metres of free water to households since 2008.

Commenting on this, Dr Xavier, who was formerly a Selangor state assemblyman and also a state executive councillor, said the state should reconsider the free water scheme in order to provide a sustainable water supply in the long run.

“Although maintaining this scheme has been factored into the water restructuring exercise, I feel that the free water programme should be targeted to areas where the lower income groups are,” he said.

Dr Xavier pointed out that the water restructuring exercise would only ensure better management of water assets.

But, to cater to the growing demand for water, he said, more treatment plants were needed.

“In fact, we have already started looking at the second phase of the Langat 2 Water Treatment Plant,” he said.

According to Dr Xavier, 756 development projects, mainly in Selangor, requiring 463 million litres per day (MLD) of water have been put on hold just from the delay of LRAL2 completion.

“Since LRAL2 will only be fully completed in 2022, I believe we must start looking at the mitigation measures, which among others include building more treatment plants,” he said.

As of 2017, Dr Xavier said the total water supply requirement — both domestic and non-domestic — for Selangor, Kuala Lumpur and Putrajaya was 4,890 MLD.

With the completion of the Sungai Semenyih 2 water treatment plant in March, he said, the total distributable capacity stood at 5,127 MLD against the projected current demand of 5,000 MLD.

“This leaves Selangor with a very thin reserve margin of 3 per cent, which is highly vulnerable to climatic conditions and surges in demand,” he pointed out.

However, with the completion of the first phase of LRAL2 and Labohan Dagang treatment plants, Dr Xavier said the reserve margin can be increased to between 7 and 10 per cent by this November.

Upon the completion of LRAL2 and Labohan Dagang, both plants are expected to supply 1,130 MLD and 200 MLD respectively.

The Selangor government through Air Selangor paid RM1.68 billion to successfully buy over the equities of Puncak Niaga Sdn Bhd (PNSB), Konsortium ABASS, and Syabas.

Splash had previously rejected an offer of RM250 million, saying that its assets were valued at far more than that. 

Dr Xavier had earlier said that negotiations on breaking the impasse between Splash and Air Selangor are expected to be resolved by August 10.