SPAN should concentrate on role as regulator
Monday, 03 July 2017

I REFER to the article “Of values and water” (Sunday Star, June 11).

I agree with Datuk Roger Tan’s view that the National Water Services Commission (SPAN) should not be involved with planning and implementation of projects related to the water industry.

The core business of SPAN is not as a planner and executor of projects but rather as a lead regulator entrusted to enforce the water supply and sewerage service matters in peninsular Malaysia.

SPAN was established via the National Water Services Industry Act 2006 (SPAN Act 2006) to implement and enforce the Water Services Industry Act 2006 (WSIA 2006).

Today, supply of clean treated water in our country is under enormous strain due to our growing population, urbanization and consumerism.

This is compounded by the fragmented and inefficient structure of the water service industry. The current infrastructure is old, poorly maintained and hampered by lack of funds. It also suffers a huge loss of revenue from leakages.

Unfortunately, investment to upgrade the infrastructure is very capital-intensive with long payback periods. The current low tariff is also a disincentive for the operators to invest in upgrading the infrastructure. Consequently, the public has suffered tremendous hardship due to numerous water disruptions.

So let SPAN fulfil its role as a technical and economic body to regulate the water services and sewerage industry. The role of SPAN is to govern the industry from treatment of raw water to discharge of waste water, supervise and monitor water supply and sewerage services activities, and to review and recommend tariffs.

In a nutshell, the task ahead is both daunting and challenging for SPAN, and involvement in project planning and implementation is a distraction that will divert it from its focus on the core business, which is to transform the water services industry into a well-regulated industry that strives for better water conservation and efficiency.

To achieve this, SPAN needs to build the basic foundation that is integral to ensure a successful transformation.

Firstly, it has to formulate the right pricing of water and source for innovative financing instruments to secure funding to finance the cost of upgrading and replacing aging assets as well as the construction of new infrastructure.

Secondly, the management of water facilities must be improved to generate revenue and cash flow to ensure the viability and long-term sustainability of the water services industry.

Thirdly, the determination of tariff is vital to ensure that operators who provide efficient and quality delivery of services are rewarded with sufficient revenue and profit margin to finance the costs involved in upgrading their services.

SPAN should develop a tariff-setting framework that promotes efficiency and transparency, provides consumers with a fair and affordable price structure, and ensures reasonable returns commensurate with the risks taken by the operators based on a cost-plus approach.

The current concerted efforts undertaken by SPAN to reform and transform the water services should not be disrupted by dissipating its technical expertise and financial as well as manpower resources to undertake a task that is deemed to be ultra vires the WSIA.

It should only be involved with the identification and determination of capital requirements, and the task of planning and implementation of projects should be transferred to the Energy, Green Technology and Water Ministry.


Petaling Jaya