Download - Water Services Reform in Malaysia
SURUHANJAYA PERKHIDMATAN AIR NEGARA1
WATER SERVICES REFORM IN MALAYSIA
14 – 16 May 2007WATER MALAYSIA 2007Kuala Lumpur Convention Centre
SURUHANJAYA PERKHIDMATAN AIR NEGARA2
1. Key Challenges
2. Shaping Efficiency and Effectiveness
3. Addressing Funding Challenges
4. Policy and Institutional Framework for Reform
5. Legal and Regulatory Framework
Water Services Industry Act
National Water Services Commission Act
6. Water Services Reform – What’s Next?
OUTLINE OF PRESENTATION
SURUHANJAYA PERKHIDMATAN AIR NEGARA3
WATER AND SEWERAGE SERVICES STATISTICS
Total Length of Pipes 98,648 km
Total No. of Connections 5,585,724
Total Expenditure RM 3,415,836,374
Total Revenue RM 3,574,960,824
Total Production 12,468 MLD
Urban Coverage 97 %
Rural Coverage 91 %
A) WATER
Total No. of Dams (Water Supply) 54
Total No. of Treatment Plants 462
Total Population 27,100,190
Total No. Reservoirs / Tanks 3,623
Total No. Personnel 14,721
Source : Malaysia Water Industry Guide 2006
SURUHANJAYA PERKHIDMATAN AIR NEGARA4
WATER AND SEWERAGE SERVICES STATISTICS
B) SEWERAGE
Total No. of Septic Tanks 990,836
Length of sewers 16,267 km
Total No. of Regional ST/ Plants 65
Operating cost (Year 2006) ~RM 400 Million
Population connected 15,932,582
Source : IWK
Total No. of Pumping Station 611
Total No. of Local ST/ Plants 8,473
SURUHANJAYA PERKHIDMATAN AIR NEGARA
Lowest – Penang (RM0.31)Highest – Labuan, Johor & Sabah (RM0.90)Average – RM0.66
* Average for First 35m3
Domestic, 2007Domestic, 2007
0.9
0.53 0.55
0.720.68
0.57
0.73
0.57
0.31
0.77
0.52
0.9
0.56
0.9
0.66
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
RM
/m3
States
REDUCING DISPARITY IN TARIFFS
SURUHANJAYA PERKHIDMATAN AIR NEGARA
Lowest – Labuan & Sabah (RM0.90)Highest – Johor (RM2.93)Average – RM1.43
* Average for First 500m3
Industry, 2007Industry, 2007
2.93
1.21 1.251.4
1.591.45
1.6
1.3
0.94
2.27
1.150.9
1.19
0.9
1.43
0
0.5
1
1.5
2
2.5
3
RM
/m3
States
REDUCING DISPARITY IN TARIFFS
SURUHANJAYA PERKHIDMATAN AIR NEGARA
Lowest – Penang (19.4%), Highest – Sabah (57.2%), Average – 37.7%
37.72424.7
57.234.7
38.419.4
36.3
5328.8
40
49.730.6
43.835.5
0 10 20 30 40 50 60 70
JohorKedah
KelantanMelaka
N. SembilanPahang
PerakPerlis
PenangSelangor
TerengganuSabah
SarawakLabuan
MALAYSIA
STA
TES
%
ADDRESSING LOSSES DUE TO HIGH NRW
SURUHANJAYA PERKHIDMATAN AIR NEGARA
1375
1608
2227
2447
2747
3056
3575
1608
1937
3502
3150
1787
2765
2688
3416
1896
0 500 1000 1500 2000 2500 3000 3500 4000
1998
1999
2000
2001
2002
2003
2004
2005
Revenue
Expenditure
RM Million
Yea
rINCREASING EFFICIENCY THROUGH EFFECTIVE OPERATION MANAGEMENT(Revenue vs Expenditure)
SURUHANJAYA PERKHIDMATAN AIR NEGARA9
KEY CHALLENGES • Promote efficiency and effectiveness in the industry
• Derive a sustainable business model in long term• Adequately address long term funding issue
• Efficient service levels• Efficient customer relations management
Efficiency and effectiveness• Inefficient operations• Ineffective structures• Ineffective regulatory• Tariff disparity among states• Poor customer relations management• Segmented approach in regulating
water and sewerage services • State Governments as service
providers
Funding• Partial cost recovery• No long term funding• Unsustainable funding structure• Under-investment• State debts• No ring-fencing• Some consumers do not pay sewerage bills• Insufficient Revenue to meet OPEX for
some states• High cost to finance rural water supply
ADDRESSING THE KEY CHALLENGES
SURUHANJAYA PERKHIDMATAN AIR NEGARA10
1. Key Challenges
2. Shaping Efficiency and Effectiveness
3. Addressing Funding Challenges
4. Policy and Institutional Framework for Reform
5. Legal and Regulatory Framework
Water Services Industry Act
National Water Services Commission Act
6. Water Services Reform – What’s Next?
OUTLINE OF PRESENTATION
SURUHANJAYA PERKHIDMATAN AIR NEGARA11
Impending changes in the industry landscape (moving towards corporate management)
RegulatoryIndependence
Transparency and
Accountability
Checks and Controls
Competitive Industry Structure
Transformation of Water and
Sewerage Industry
Below cost recovery
Ineffective regulatory structure
Absence of benchmarking
regime
Public perception
Absence of long term
sustainability
Current industry shaping forces
SHAPING EFFICIENCY & EFFECTIVENESS
Government as Service Provider
SURUHANJAYA PERKHIDMATAN AIR NEGARA12
1. Key Challenges
2. Shaping Efficiency and Effectiveness
3. Addressing Funding Challenges
4. Policy and Institutional Framework for Reform
5. Legal and Regulatory Framework
Water Services Industry Act
National Water Services Commission Act
6. Water Services Reform – What’s Next?
OUTLINE OF PRESENTATION
SURUHANJAYA PERKHIDMATAN AIR NEGARA13
Low-Interest Finance
Long-Term Funding
Long-Term Sustainability
Medium-term Government
Support
Sustainable long-term funding
structure
Impending Changes in the industry landscape
Deficit cash-flow
Absence of long-term
funds
Tariff increase
guarantee
Guaranteed returns
Absence of long term
sustainability
Current industry shaping forces
ADDRESSING FUNDING CHALLENGES
SURUHANJAYA PERKHIDMATAN AIR NEGARA14
1. Key Challenges
2. Shaping Efficiency and Effectiveness
3. Addressing Funding Challenges
4. Policy and Institutional Framework for Reform
5. Legal and Regulatory Framework
Water Services Industry Act
National Water Services Commission Act
6. Water Services Reform – What’s Next?
OUTLINE OF PRESENTATION
SURUHANJAYA PERKHIDMATAN AIR NEGARA15
BODYAREA OF
RESPONSIBILITY DESCRIPTION
Federal Government (Ministry of Energy, Water and Communications)
Policy matters Development of a holistic water policy for the country by setting policy directions.
State Government Raw Water matters Regulate raw water abstraction and catchment management
National Water Resource Council (NWRC) – chaired by Prime Minister
Water Resource matters – Cross boundaries / Inter state / Issue of National interest
Ensures coordination with the various State Government in the management of the water basins.
National Water Services Commission (SPAN)
Regulatory matters Regulate the water services industry (water and sewerage services)
POLICY & INSTITUTIONAL FRAMEWORK ON WATER SERVICES REFORM
SURUHANJAYA PERKHIDMATAN AIR NEGARA16
Amendments to Federal Constitution 2005 enables Federal Government to regulate water services and State Government retain rights to regulate raw water in the value chain of water cycle
WATERSOURCE
TREATMENTOF WATER CONSUMERS
TREATMENTOF SEWAGE
WATER CYCLESTATE FEDERAL
CLEAR DEMARCATION OF JURISDICTION
ABSTRACTION
WASTE WATERDISCHARGE
DISTRIBUTION
SURUHANJAYA PERKHIDMATAN AIR NEGARA17
1. Key Challenges
2. Shaping Efficiency and Effectiveness
3. Addressing Funding Challenges
4. Policy and Institutional Framework for Reform
5. Legal and Regulatory Framework
Water Services Industry Act
National Water Services Commission Act
6. Water Services Reform – What’s Next?
OUTLINE OF PRESENTATION
SURUHANJAYA PERKHIDMATAN AIR NEGARA18
NATIONAL POLICY OBJECTIVESNational Policy Objectives for the Water Supply and Sewerage Services Industry includes:
To establish a transparent and integrated structure for water supply services and sewerage services that delivers effective and efficient service to consumers
To ensure long term availability and sustainability of water supply including the conservation of water
To facilitate the development of competition to promote economy and efficiency in the water supply services and sewerage services industry
To regulate for the long-term benefit of the consumers
To regulate tariff and ensure the provision of affordable services on an equitable basis
SURUHANJAYA PERKHIDMATAN AIR NEGARA19
WATER SERVICES INDUSTRY ACT 2006
An Act to provide for and regulate water supply services and sewerage services
Objective : to establish a licensing and regulatory framework for regulatory intervention to promote national policy objectives for the industry.
Does not affect general applications of existing laws on environment quality and land matters and existing State powers on water source.
SURUHANJAYA PERKHIDMATAN AIR NEGARA20
Economic Regulations
Technical Regulations
Consumer Protection
Social Regulations
CLASSIFICATION OF PROVISIONS OF WATER SERVICES INDUSTRY ACT
SURUHANJAYA PERKHIDMATAN AIR NEGARA21
Addressing Inefficiencies and
Ineffectiveness
Comparative Regulations /
BenchmarkingKPIs/
Standards
Integration of water and sewerage services
Water ForumRegulated
Tariff
Furnishing of Information
Licensing
Business Plan
PROVISIONS UNDER WSIA THAT ADDRESS THE ISSUES OF EFFICIENCY AND EFFECTIVENESS
SURUHANJAYA PERKHIDMATAN AIR NEGARA22
TYPES OFLICENCES
Two types of Licences:
CLASS(Private Systems)
INDIVIDUAL(Public Systems)
•Strict conditions•Limited numbers•Comprehensive obligations•Approval by Minister, upon SPAN’s
recommendation
•Less conditions•Unlimited numbers•Minimum obligations•Approval via registration
LICENSING STRUCTURE
SURUHANJAYA PERKHIDMATAN AIR NEGARA23
INDIVIDUAL
(PUBLIC SYSTEMS)
LICENSING STRUCTURE
WATER SEWERAGE
Facilities
Owned sewerage facilities
Services
Provide services
ServicesFacilities
Owned water facilities
Treatment Distribution
SURUHANJAYA PERKHIDMATAN AIR NEGARA24
TECHNICAL REGULATIONS
PERMIT & CERTIFICATION
OF CONTRACTORS
Examples:• For construction, connection, modification or repairs of pipes• Maintenance services of system• Desludging services
Examples:• KPIs – response time, coverage, water
quality, pressure, continuity, NRW• Standards & specifications of systems
& equipment• Qualification of persons operating the
system
TECHNICAL & PERFORMANCE
STANDARDS FOR
OPERATORS
TECHNICAL REGULATIONS
SURUHANJAYA PERKHIDMATAN AIR NEGARA25
CONSUMERPROTECTION
CONSUMER PROTECTION
• Deal reasonably with
consumers• Address consumer
complaints
Quality of Service
• Regulations on rates made
by Minister upon SPAN’s
recommendation
Rates and Deposits
SURUHANJAYA PERKHIDMATAN AIR NEGARA26
Sewerage Capital Contribution Fund
Contributions from developers
Purpose:
1. Supplement capital expenditure required for sewerage assets
2. Implementation of a regional sewerage system
Water Industry Fund
Contribution from licensees
Purpose:
1. Protection and preservation of the watercourses
2. Ensure sustainability of water supply from the watercourses
3. Improvement of water quality at the watercourses
4 Provision of water and sewerage services in rural development
Water Forum
Commission to designate
Functions:
1. Give feedback and make recommendations to the Commission
2. Represent the interest of consumers
3. Promote consumer’s interest in relation to the tariffs and standards
SOCIALREGULATIONS
SOCIAL REGULATIONS
SURUHANJAYA PERKHIDMATAN AIR NEGARA27
Federal Government has formed a wholly-owned Water Asset Management Company (PAAB) under Minister of Finance Incorporated to address the funding requirement of the industry
PAAB will also address the outstanding loan of State Government to Federal Government
ADDRESSING FUNDING CHALLENGES
SURUHANJAYA PERKHIDMATAN AIR NEGARA28
National Water Services Commission (SPAN) Act 2006
LEGAL AND REGULATORY FRAMEWORK
SURUHANJAYA PERKHIDMATAN AIR NEGARA29
Functions and powers of SPAN include: To advise the Minister on the national policy objective
To implement and enforce the provisions of WSIA
To supervise and monitor water supply services and sewerage services activities
To review and recommend tariffs
SPAN is the economic and technical regulator
Chairman and CEO appointed on 1 March 2007
8 other members appointed on 2 April 2007
Temporary office at Block E4/E5, LEO Building, Parcel E, Putrajaya Malaysia
NATIONAL WATER SERVICES (SPAN) ACT 2006
SURUHANJAYA PERKHIDMATAN AIR NEGARA30
1. Key Challenges
2. Shaping Efficiency and Effectiveness
3. Addressing Funding Challenges
4. Policy and Institutional Framework for Reform
5. Legal and Regulatory Framework
Water Services Industry Act
National Water Services Commission Act
6. Water Services Reform – What’s Next?
OUTLINE OF PRESENTATION
SURUHANJAYA PERKHIDMATAN AIR NEGARA31
Water Services Industry Act 2006
Constitution Amendments 2005
National Water Services Commission Act 2006
WATER SERVICES REFORM – What’s Next?
IMP
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MISSION :- Efficient- Reliable- Affordable- Sustainable
WATER AND SEWERAGE SERVICES
SURUHANJAYA PERKHIDMATAN AIR NEGARA32
THANK YOU