Malaysia may privatise water supply

“Producing water is a costly affair,” the Minister is reported in The Star newspaper as saying. “No state in the country can produce a million gallons of water and sell a million to the consumer.” Water suppliers manage to sell only about 35-40% of the water they produce, with many people not paying for their supply. “In the end you have to turn to privatisation,” he said.

People do not respect the government subsidy, which has aided water distribution in the country over the last 43 years, requiring that citizens pay only 1% of their disposable monthly income, compared to the World Bank’s proposal of 5%, explained Samy Vellu. “Anything you give cheap or free has no value,” said the Minister. “You must charge people money, then they value it.”

He said that privatisation would enable companies to manage water supply better, and charge customers the price of water production. However, the Government would control the price of water to prevent overcharging. “A regulatory body would be set up to control the price of water based on the cost of production, profit needed by the company, and what could be charged to consumers,” said Samy Vellu.

An example of the problems faced by Malaysia’s states include that of Selangor, where the Government spends RM1 billion (US$263 million), but collects only RM200 million (US$53 million) from consumers.

Recently, it was announced that a Malaysian water company, had purchased Wessex Water from the disgraced utility giant Enron (see related story).