Monday, March 02, 2009

SYABAS v PBA

The Selangor State Government has promised that if we were to take over the operations and maintenance of the water concessions in Selangor, we will be able to immediately offer a 10% reduction in water tariffs, while longer term improvements in efficiency will easily bring about a 25% reduction in tariffs within 5 years. Instead a bailout is now in progress for these private water concessionaires.

Here's a clear illustration of why it can easily be done by comparing what the people of Selangor pays for water today, relative to our friends in Penang.


The above shows clearly that at the people of Selangor are being fleeced for its water for at every stage, Syabas charges more than double the rates charged by Perbadanan Bekalan Air (PBA) Pulau Pinang! 

In fact, if you use only 38m³ of water a month, in Penang you'd be paying the rate of RM0.42, while in Selangor, you'd be paying a whopping rate of RM2.00, or nearly 5 times the price!  Or in absolute terms, you'll be paying RM11.96 in Penang, but it's an incredible RM32.85 in Selangor and KL!
What's more, PBA is very profitable (check the accounts) despite the lower water rates. It made RM31.3 million last year on revenues of RM187.8 million, or a very decent net profit margin (after tax) of 16.7%.  Therefore Syabas which supplies much more water than Penang, should have the economies of scale to offer even lower prices than Penang!

Hence for the Selangor state to promise that we can cut the fat in Syabas to reduce rates by 25% within 5 years is "chicken feet"!

However, when asked by The Star, the Minister immediately dismissed our pledge:
How can the state reduce the tariffs? To avoid the hike, it would have to compensate the concessionaires and this could amount to RM38 million a month. If we take over the assets, it would be much lower than the 31% [scheduled] tariff hike.
The Minister misses the point, whether intentionally or otherwise.

The whole idea about asking the Federal Government to support Selangor's takeover offer is so that we can get out of the crony contract signed by the previous Minister, which allowed Syabas to increase rates in 2009 by up to 37%, or a monthly RM38 million compensation in exchange.

If Selangor government takes over the assets and concession, we will then be able to offer not just a token "lower tariff hike" but actually be able to cut rates by 10% immediately, and more after working off the fats in the system.

11 comments:

Unknown said...

I don't think the comparison with Penang is very valid - Penang gets free raw water from Kedah. Selangor has to bear the cost of maintaining dams and water catchment areas.

In any case, yes, SYABAS is horribly inefficient simply because of the way it was privatized. But I do not think that a scarce resource like water should be sold at the cheapest possible price - it would merely encourage increased demand for water. Yes, keep the base rate of water low - but keep the rest of the rates sufficiently high to encourage water conservation.

Unknown said...

Hey Rajan,

1. At this point of time, Syabas only pay RM14 million per annum for its water from Selangor. It's peanuts, relative Syabas' revenue which is 10x that of PBA.

2. PBA also maintains 9 dams in Penang. Water may "come from" Kedah, but extraction and processing is still in Penang.

3. Post- restructuring, all assets will be transferred to Federal Government anyway, but the new "licensees" are still looking at increasing water rates.

Hence PBA v Syabas comparison is more than fair.

Also, while water rates is cheap in Penang - are you saying that Penangites waste a lot more water than those residents of Selangor?

I don't think so.

Tony

Anonymous said...

may we ask why is water management in Penang so efficient and cheap ?

Unknown said...

Hi YB - Tks much for high-lighting and trying to right all this fleecing. (toll , water etc.)

Anyone looking into reducing TNB charges for home user?

And removing the redundant RM20 odd recurring Telekom charges?

once again tks much!

Anonymous said...

cool says :
we have seen it many a time
umno-bn ministers fighting tooth-and-nail 4 private companies
to increase prices, tariffs, toll, rates
rarely have they fought 4 d people
2 reduce the same
they will take refuge by parroting d same old cockamamie :
we cannot breach the contract signed
or else we will have 2 pay compensation as per contract
i say, since u signed a terribly lop-sided contract favouring cronies,
without open tender
u pay-lah !!
IPPs, highway robbery toll companies, water concessionaires,rice cartels, petroleum companies, timber tycoons, APs, taxi licences,
d rakyat can c how umno-bn is intertwined with big business
who support them financially
so, they can use it 2 hold on 2 power
they r like d pigs n farmers in animal farm
both working 4 each others benefit
while d poor rakyat can only look in thru d window
in cold n hunger
this cant go on
taking peoples money n stashing it into crony pockets
d rakyat will have 2 decide
whether they still want 2 be fleeced by umno-bn bloodsuckers
pakatan rakyat must go on
tirelessly explaining 2 d people
u have come so far
be united n save us
from d millionaire-regime
of umno-bn

Anonymous said...

If the BN goons see the fact and still going against the fact.

Then they really have "unsound mind".

Anonymous said...

Sorry for being pedantic, but it's chicken "feeD" and not "feeT"

Kok Yoon Lee

Towards healthy and leisure life~! said...

Tony,
It's really horrible when we look at how BN wants to fight with Pakatan Rakyat over SYABAS issue recently.

And also how they treat Tan Sri Khalid.

Keep it up, we support you!

yowchuan said...

We're definitely getting the shorter end of the stick each time, whether privatised or not.

I have to agree with Rajan that we should not only look at the tariff rates. Water is a very precious resource. Look at the way Singapore is conserving water, and their initiatives in the "New Water Project"! I must respect their government for that.

Cambodia is also much more advance than Malaysia in terms of their public water projects:
http://www.adb.org/Water/actions/CAM/PPWSA.asp

Just how are these private water companies' performance are evaluated? Yes, they might have got the job, but that doesn't mean they can't be fired if they are not doing a good job. The contract must have something that holds these companies liable for their performance on the job.

Anonymous said...

YB. I'll concede 1 and 2. But on 3, there isn't any Google-able data on water consumption patterns in Penang and Selangor. So intuitively, based on demand and supply, I think it is fairer to say that on a per capita basis, Penang probably consumes more water.

Furthermore, Penang can depend on Kedah, and possibly in the future, Perak for water. On the other hand, one of Toyo's potential pet project was a Pahang-Selangor water transfer - across the Titiwangsa. Which means there is a even more dire need for conservation in Selangor - if we are looking to build pipelines over a mountain range, I don't think reducing all level of the water rates is the best move. And remember, Selangor/KL has probably more than 6 million residents, triple that of Penang.

Not to mention each subsequent dam built adds irreparable damage to the environment - if it is to supply industries and household with rates that provide them with no incentive to conserve water, I don't think those are worth it.

More than Penang, water is a scarce resource. I'm all for a low base rate (or even Khalid Ibrahim's free water base) as a form of social welfare, but the rest of the rate ought to reflect the scarcity of water.

Anonymous said...

As I know, this month June 2009 Selangor state government supposed to take SYABAS?
Tan Sri Rozali, please give it back to Rakyat Selangor because you already rich man and owned too many companies.
We want cheaper teriff water rate !!!!!!!

MB Selangor, please fight 4 us.....
Thank you.