WATER AND WASTE WATER GOVERNANCE THE CHALLENGES AHEAD

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CONFERENCE ON MANAGING CHALLENGES TOWARDS
SUSTAINABLE WATER RESOURCES AND ENVIRONMENT

• WATER AND WASTE WATER GOVERNANCE THE CHALLENGES
  AHEAD

BY LEE KOON YEW WATER SUPPLY DEPARTMENT MINISTRY
OF ENERGY, WATER COMMUNICATIONS
26-27 March, 2007, Grand Bluewave hotel, Shah
Alam Kuala Lumpur, Malaysia  
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ISSUES

• No single agency with overall responsibility for
  holistic planning and management of water
• Ineffective regulatory structures and poor
  enforcement in the States
• Insufficient funds and revenue to meet high
  capital cost of works
• Low cost recovery from low tariffs

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ISSUES

• CAPEX Predominantly Financed by
  Public Sector
• Ninth Malaysia Plan Water Supply
  RM8.2 billion
• Sewerage RM3.5
  billion
• High NRW varies from 20 to 50
• Assets in poor conditions (water supply
  sewerage)
• Customer service standards almost non-existent
• Water Privatisation Non holistic except Johore,
  Penang, Trengganu, Kelantan

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KEY FACTS REGARDING THE WATER INDUSTRY
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THE NEED TO REFORM THE WATER SERVICES INDUSTRY

• To ensure an efficient and effective quality
  delivery system to meet the rising aspirations of
  the people
• To ensure long term availability and
  sustainability of water supply including the
  conservation of water

MOVING FORWARD Overview of the WSI Act and NWSC
Act
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WHATS REQUIRED

• REQUIRE TO IMPROVE PERFORMANCE
• STRUCTURE AND GOVERNANCE CHANGE NECESSARY TO
  IMPROVE LEVEL OF SERVICE
• REQUIRE ALTERNATIVE SOURCE OF FINANCING
• LARGE CAPITAL REQUIRED FOR NEW
  WORKS,IMPROVEMENT AND REHABILITATION OF EXISTING
  INFRASTRUCTURE

MOVING FORWARD Overview of the WSI Act and NWSC
Act
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INDUSTRY REFORM NATIONAL OBJECTIVES
To create an industry that will ensure long
-
term sustainability of the

water supply and sewerage services industry

To regulate for the long term benefit of
consumers and develop h
igh
consumer confidence in service delivery
To facilitate development and promote competition
so as to enhan
ce

economic and technical efficiency in the supply
and delivery to
consumers
To establish a regulatory environment that will
lead to efficien
t

allocation of economic and financial resources
through sustainab
le
public and private collaboration and partnership

To establish a transparent and effective system
of governance th
at
promotes excellence in all aspects of the service
delivery and
provision.
MOVING FORWARD Overview of the WSI Act and NWSC
Act
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MOVING FORWARD Overview of the WSI Act and NWSC
Act
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Addressing Funding Challenge Through WAMCo
Fund
Dams
Federal Government
Ownership
Lease
Lease Payment
Water Asset Management Company (WAMCO)
(Based on affordability)
Bond / Capital market
Operators
Lease
Build asset WTP, Dist. Network etc.
MOVING FORWARD Overview of the WSI Act and NWSC
Act
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MOVING FORWARD Overview of the WSI Act and NWSC
Act
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Challenges facing the operators
and
concessionares
Impending Changes
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Consequences of WSIA
Challenges facing the operators and
concessionares
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IMPENDING CHANGES

• The Water Industry Fund will be set up to assist
  States to maintain water resources. Licensed
  water service providers will contribute to the
  kitty
• The Sewerage Capital Contribution Fund will be
  set up.
• Developers contribute to it
• Certifying agencies will be set up to approve
  plans, certify contractors and monitor compliance
  with subsidiary legislations
• There will be an Appeal Tribunal to review
  decisions of the Commission
• Consumers will have a voice in the Water Forum
• Consumers get some protection through regulation
  of workmanship, materials used, contractors
  certification and licensing of service providers

Challenges facing the operators and
concessionares
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• All water industry players must be licensed to
  treat, distribute it and own a facility
• Current concession holders can migrate to the
  licensing regime by re-negotiating their
  agreements with the Commission within a specified
  time period
• If they do not migrate, they stay only until the
  end of their concession agreement period. After
  that this they can no longer take part in the
  industry
• Licensed holders must submit three-year rolling
  business plans. They can be penalized for not
  keeping to the plan
• Span can take over the operation if the company
  becomes insolvent, unable to meet obligations or
  contravene principal duties.

Challenges facing the operators and
concessionares
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ROLES OF SPAN
Pipe
Water
Storage
Treatment
Distribu
-
Sewerage
Reve
-
Customer
reticula
-
catch
-
facilities
services
tion
services
nue
relations
tion
ment
services
Manage
Fittings
ment
Liaise with
Licensing
Licensing
Licensing
Licensing
Set
Permit for
Water
States,
standard of
pipe
Forum
DOE,
Plan and
Define
Monitor
Set
revenue
contractors
operators
monitor
standards
NRW
standards
assurance
and
Monitor
on raw
storage
for water
for
plumbers
customer
water
capacity
treatment
Monitor
sewerage
Set
demand
quality
plants
treated
services
standard of
Piping and
and reach
Define
water
collection
fittings
standards
Monitor
quality
Monitor
efficiency
Standard
SPAN
for dams
water
performance
and specs
and
production
Water
Tariff
reservoirs
pressure
setting
Bulk
Supply
Rate
Business
Plan
Challenges facing the operators and
concessionares
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Challenges facing the operators and
concessionares
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The future outlook for the water
industry Expectations from consumers and service
providers
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The future outlook for the water industry
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A NEW PERSPECTIVE ON WATER SERVICES

• WATER SUPPLY
• SEWERAGE
• SERVICE It not just about delivering or taking
  away so many gallons of water. It's about
  providing a service.

The future outlook for the water industry
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CONCLUSION
WAY FORWARD FOR MALAYSIA IN WATER

MANAGEMENT

Good governance

clear regulations on performance

stds
and source of revenue to finance infrastructure

Economic regulation to improve industrys
efficiency, building investor confidence and
encourage consumers to pay for services

Benefit sustainability, security of supply, of
the right
quantity quality ALL THE TIME at the right
price.
CONCLUSION
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