Restructuring of Kelantan water industry finalised

PUTRAJAYA: The restructuring of the water services industry in Kelantan was finalised today.
The move will benefit some 1.6 million consumers and ensure a sustainable water industry in the state.
Three agreements on the matter were signed here today witnessed by Prime Minister Datuk Seri Najib Abdul Razak and Kelantan Mentri Besar Datuk Ahmad Yakob.
They were a master agreement between the Federal Government, the PAS-led Kelantan government, Air Kelantan Sdn Bhd (AKSB), Pengurusan Aset Air Berhad (PAAB); an agreement on facilities between PAAB and AKSB and a lease agreement between PAAB and AKSB.
The agreements were inked by Energy, Green Technology and Water Ministry secretary-general Datuk Seri Dr Zaini Ujang; Kelantan Deputy State Secretary (Development) Datuk Dr Tengku Mohamed Faziharudean Tengku Feissal; AKSB chairman Datuk Hanifa Ahmad and PAAB chief corporate officer Abdul Hadi Ali.
Also present were Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi, Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili and International Trade and Industry Minister Datuk Seri Mustapa Mohamed.
Negotiations to improve the state's water services industry between the Federal Government and the Kelantan government had started in 2008 but hit many snags before the successful outcome today.
At a press conference afterwards, Ongkili said the move was an initiative by the Federal Government to assist AKSB in terms of finance to create a sustainable water services industry in Kelantan.
With the restructuring, he said matters on management of water supply and the water industry were under the purview of the state government while the Federal Government would act a a regulator as provided for under the Water Services Industry Act 2006 (Act 655).
He said AKSB will focus on efficiency and effectiveness of operations and maintenance to ensure consumers received water supply that was sufficient, of good quality and with minimum disruptions.
"PAAB will take over loans related to water services taken by the Kelantan government amounting to RM604 million, including RM513 million loaned by the Federal Government. PAAB will provide capital to AKSB to upgrade as well as renew its water assets and build new (water) infrastructure," he said.
"It involves extending the length of the finance lease up to 45 years. In addition, this funding is at a much lower cost as compared to what commercial banks offer," he said, adding that the rental lease includes assets such as land and water related assets (pumps and water treatment plants.
Ongkili said AKSB will repay a total of RM18.64 million a year to PAAB.
Kelantan is the eighth state to do restructuring of water supply services as provided for under Act 655, after Johor, Malacca, Negri Sembilan, Penang, Selangor, Perlis and Perak.
Meanwhile, Ahmad said was grateful to the federal government, the ministries and agencies involved in the restructuring project to improve the water services industry in Kelantan.
"Within the first four years after the agreement is signed, we will see how the industry progresses," said Ahmad.
Ahmad said the KPIs (Key Performance Indicators) set by the National Water Services Commission (SPAN) was that within three years, coverage of water supply in the state must increase from the 60% now to 75%.
This entails producing a total of 800 million litres of water a day (MLD) as compared to the 420 MLD now and to reduce non-revenue water from 48% to 35%.
"AKSB must meet these KPIs. We will monitor and we can take action including revoking their licence," said Ahmad.
Meanwhile, Mustapa, who is also the Kelantan UMNO Liaison Committee chairman, said the move by federal government to agree to restructure the water services industry in Kelantan showed that it put people's interest first.
"I admit that the people of Kelantan are having high hopes for the improvement of the state's water services. However, it will take some time," he said. — Bernama