THE 4TH NATIONAL UTILITIES SUMMIT 2007

STRATEGIC INITIATIVES IN WATER SERVICES REFORM IN MALAYSIA

by: TAN SRI DATO IR. HAJI ZAINI BIN OMAR Chairman, National Water Services Commission (SPAN) 28th - 29th August 2007 Renaissance Hotel, Kuala Lumpur MALAYSIA

SURUHANJAYA PERKHIDMATAN AIR NEGARA

OUTLINE OF PRESENTATION

1.

Strategic Initiatives for Reform

i. ii.

Legal and Regulatory Framework Policy and Institutional Framework

2. 3.

Role of SPAN after WSIA ACT 2006 Whats next?

SURUHANJAYA PERKHIDMATAN AIR NEGARA

AMENDMENT TO FEDERAL CONSTITUTION

Amendment to Federal Constitution pertaining to jurisdiction on water supply gazetted on 10 February 2005 Previously water supply was under State List With amendment, water services and supplies are listed

under Concurrent List Water source remains with State Government

Amendments to Federal Constitution 2005 enables Federal Government to regulate water services and State Government retains right to regulate raw water in the value chain of water cycle

SURUHANJAYA PERKHIDMATAN AIR NEGARA

WATER SUPPLY SYSTEM

STATE
TR UN KM

CATCHMENT AREA BALANCING RESERVOIR DAM RIVER WATER TREATMENT PLANT

AIN

SERVICE RESERVOIR

TR IS D TI U IB N O M N AI

CONSUMER

SOURCE

TREATMENT

DISTRIBUTION

Before Federal Constitution Amendment

SURUHANJAYA PERKHIDMATAN AIR NEGARA

WATER SUPPLY SYSTEM

STATE
TR UN KM

FEDERAL

CATCHMENT AREA BALANCING RESERVOIR DAM RIVER WATER TREATMENT PLANT

AIN

SERVICE RESERVOIR

TR IS D TI U IB N O M N AI

CONSUMER

SOURCE

TREATMENT

DISTRIBUTION

After Federal Constitution Amendment

SURUHANJAYA PERKHIDMATAN AIR NEGARA

SEWERAGE SYSTEM
A) Individual Septic Tank

PREMISE OWNER

SEPTIC TANK

B) Connected System
PUBLIC SEWER
P IO CT NE ON E C PE AT PI RIV N

PREMISE OWNER

SEWAGE TREATMENT PLANT RIVER

TREATMENT

COLLECTION

Sewerage remains under the jurisdiction of Federal Government

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SURUHANJAYA PERKHIDMATAN AIR NEGARA

WATER SERVICES INDUSTRY (WSIA) ACT 2006 [Act 655]

An Act to provide for and regulate water supply services and sewerage services Objective : to establish a licensing and regulatory framework for regulatory intervention to promote national policy objectives for the industry. Does not affect general applications of existing laws on environment quality and land matters and existing State powers on water source. Approved in Parliament in June 2006 and gazetted on 20th July 2006 Date Act comes into force to be determined by the Minister
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SURUHANJAYA PERKHIDMATAN AIR NEGARA

NATIONAL POLICY OBJECTIVES

National Policy Objectives for the Water Supply and Sewerage Services Industry are:
i.

To establish a transparent and integrated structure for water supply services and sewerage services that delivers effective and efficient service to consumers; supply including the conservation of water;

ii. To ensure long term availability and sustainability of water iii. To contribute to the sustainability of the watercourse and the

water catchment areas;

iv. To facilitate the development of competition to promote

economy and efficiency in the water supply services and sewerage services industry;
v. To establish a regulatory environment which facilitates

financial self sustainability amongst the operator in the water services and sewerage services industry in the long term;
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SURUHANJAYA PERKHIDMATAN AIR NEGARA

NATIONAL POLICY OBJECTIVES (Contd)

vi. To regulate for the long-term benefit of the consumers; vii. To regulate tariff and ensure the provision of affordable

services on an equitable basis;

viii. To improve the quality of life and environment through the

effective and efficient management of water supply services and sewerage services; governance between operators in the water services and sewerage services industry; and system and sewerage system.

ix. To establish an effective system of accountability and

x. To regulate the safety and security of the water supply

SURUHANJAYA PERKHIDMATAN AIR NEGARA

SURUHANJAYA PERKHIDMATAN AIR NEGARA ACT 2006 [Act 654]

An Act to establish the Suruhanjaya Perkhidmatan Air Negara SPAN (National Water Services Commission) and set out the function and powers of SPAN which includes:
To advise the Minister on the national policy objective To implement and enforce the provisions of WSIA To supervise and monitor water supply services and sewerage services activities To review and recommend tariffs

SPAN is the economic and technical regulator Approved by Parliament in June 2006 and came into force on 1 Feb 2007 Chairman and CEO appointed on 1 March 2007 8 other members appointed on 2 April 2007 Temporary office at Ministry of Energy, Water and Communications Block E4/E5, Parcel E, Putrajaya Malaysia A launching grant of RM20 million was received on 22 May 2007 for the setting up and initial operation
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SURUHANJAYA PERKHIDMATAN AIR NEGARA

POLICY & INSTITUTIONAL FRAMEWORK ON WATER SERVICES REFORM

BODY Federal Government (Ministry of Energy, Water and Communications) State Government AREA OF RESPONSIBILITY Policy matters DESCRIPTION Development of a holistic water policy for the country by setting policy directions. Regulate raw water abstraction and catchment management Ensures coordination with the various State Government in the management of the water basins.

Raw Water matters

National Water Resource Council (NWRC) chaired by Prime Minister

Water Resource matters Cross boundaries / Inter state / Issue of National interest Regulatory matters

National Water Services Commission (SPAN)

Regulate the Water Services industry (Water and Sewerage services)

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SURUHANJAYA PERKHIDMATAN AIR NEGARA

CURRENT WATER REGULATORY REGIME IN MALAYSIA

NT E ED
SATU

FR

M G A

DIFFE RENT

JBAT

PR O C EDUR ES D
IF FE RE N T RU L

FF I

NT RE E

PI K

JKAS
ABASS

I CE F SE R V SO LEVEL ENT DIFFER

AKSB

JAK

ES

ESB SAJH
BAKAJ
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SWC

M OR IF UN ON N

LE

ON TI A ISL G

BKAM

JBAPP

CIPLES TING PRIN ARIFF SET NIFORM T NON-U SURUHANJAYA PERKHIDMATAN AIR NEGARA

NEW WATER REGULATORY REGIME

ABASS

SATU

ESB SWC SAJH SPAN

One regulatory body Uniform legislation Uniform regulation and rules Uniform tariff-setting principles and procedures Standard Key Performance Indicators (KPIs) Standard Operating Procedures Standard product certification procedures

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SURUHANJAYA PERKHIDMATAN AIR NEGARA

SURUHANJAYA PERKHIDMATAN AIR NEGARA (SPAN) ORGANISATION STRUCTURE

SURUHANJAYA PERKHIDMATAN AIR NEGARA
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Y.Bhg. Tan Sri Dato Ir. Hj. Zaini Omar (Chairman) Y.Bhg. Datuk Suboh Mohd Yassin Y.Bhg. Dato Ir. Syed Muhammad Shahabudin Y.Bhg. Dato Zulkifly Rafique Y.Bhg. Dato Ir. Sonny Cheah Lai Shin Y.Bhg. Datuk Marimuthu Nadason Y.Bhg. Prof. Dato Ir. Dr. Zaini Ujang PENGERUSI Tn. Hj. Japar Abu Tan Sri Dr. Chin Yoong Kheong Zaini Omar Y.Bhg. Dato Teo Yen Hua (Chief Executive Officer)

INTERNAL AUDIT UNIT

CHIEF EXECUTIVE OFFICER

REGULATORY REFORM AND INTEGRATION DIVISION RESEARCH, DEVELOPMENT AND INOVATION DIVISION LEGAL AND SECRETARIAL SERVICES DIVISION CORPORATE AFFAIRS DIVISION HUMAN RESOURCE UNIT REGIONAL OFFICES Northern, Central, Southern and Eastern

WATER REGULATORY DEPARTMENT (EXECUTIVE DIRECTOR)

SEWERAGE REGULATORY DEPARTMENT (EXECUTIVE DIRECTOR)

ECONOMIC AND SOCIAL REGULATORY DEPARTMENT (DIRECTOR)

TECHNICAL STANDARD AND COMPLIANCE DIVISION

RESOURCE PLANNING AND ENGINEERING SERVICES DIVISION

TECHNICAL STANDARD AND COMPLIANCE DIVISION

CATCHMENT PLANNING AND CONTROL DIVISION

LICENSING AND TARIFF DIVISION

DATA AND INFORMATION MANAGEMENT DIVISION

CONSUMER AFFAIRS, MONITORING AND ENFORCEMENT DIVISION

DEPARTMENT

UNIT

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DIVISION

SURUHANJAYA PERKHIDMATAN AIR NEGARA

OUTLINE OF PRESENTATION

1.

Strategic Initiatives for Reform

i. ii.

Legal and Regulatory Framework Policy and Institutional Framework

2. 3.

Role of SPAN after WSIA ACT 2006 Whats next?

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SURUHANJAYA PERKHIDMATAN AIR NEGARA

WHO ARE BEING REGULATED?

PUBLIC WATER OPERATORS
20 nos.

PRIVATE WATER OPERATORS PRIVATE SEWERAGE OPERATORS REGULATED BY SPAN

3,000 nos.

PUBLIC SEWERAGE OPERATORS

IWK, PBT Kelantan, PBT Pasir Gudang + MBJB

SEWERAGE CONTRACTORS
1,409 nos.

WATER CONTRACTORS
2,235 CIDB Reg. 2,953 PKK Reg.

PLUMBERS MANUFACTURERS / SUPPLIERS

4,500 nos.

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300 nos. (Sewerage Products)

SURUHANJAYA PERKHIDMATAN AIR NEGARA

WATER OPERATORS
GOVERNMENT ENTITIES
Jab. Bek. Air Negeri

CORPORATE ENTITIES
Syarikat Air Terengganu

PRIVATE ENTITIES
Treatment and Distribution

Sembilan (JBANS)
Lembaga Air Perak

Sdn. Bhd. (SATU)

Syarikat Air Melaka

- Air Kelantan Sdn. Bhd. (AKSB) - Perbadanan Bekalan Air Pulau Pinang (PBAPP)
Treatment only

(LAP)
Jab. Bek. Air Pahang Jab. Bek. Air Labuan Jab. Bek. Air Kedah Jab. Kerja Raya Perlis

Berhad (SAMB)

- SPLASH - Puncak Niaga (PNSB) - ABASS - Equiventure Sdn Bhd (ESB) - Southern Water Corp. (SWC) - Metropolitan Utilities (MUC)
Distribution only

- Syarikat Bekalan Air Selangor (SYABAS) - SAJ

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SURUHANJAYA PERKHIDMATAN AIR NEGARA

CORPORATISATION STATUS OF STATE WATER AUTHORITIES

STATE WATER AUTHORITY STATUS TARGETTED DATE

Lembaga Air Perak (LAP) JBA N. Sembilan JBA Pahang Unit Air JKR Perlis JBA Labuan JBA Kedah

Final stage of approval at EPU Final stage of approval at EPU Final stage of approval at EPU Consultant appointed Initial stage of study by consultant Final stage of study by consultant

Corporatisation of all remaining states to be completed by the end of 2007

SPAN does not promote privatization but instead promotes corporatisation of State Water Authorities to enable them to operate as efficient corporate entities
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SURUHANJAYA PERKHIDMATAN AIR NEGARA

REGULATION FOCUS FOR REFORM UNDER WSIA ACT

Social Regulation Efficient and Effective Effective Regulation Water Supply Services

Technical Regulation

Consumer Protection

Economic Regulation

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SURUHANJAYA PERKHIDMATAN AIR NEGARA

ECONOMIC REGULATION
As an Economic Regulator, SPAN recommends to the Minister for the granting of: a) Individual Licence to: Own a public water supply system or public sewerage

system or any part of the system; or Undertake, provide or make available any water supply services or sewerage services or part of the services by means of operating a public water supply system or public sewerage system

b) Class Licence to: Own a private water supply system or private sewerage

system or any part of the systems; or Undertake, provide or make available any water supply services or sewerage services or part of the services by means of operating a private water supply system or private sewerage system

[Section 4 28]
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SURUHANJAYA PERKHIDMATAN AIR NEGARA

ECONOMIC REGULATION
Approve 3 year rolling business plan and updated on an annual basis which details out:

The individual licensees plan for expansion, maintenance, repairs, upgrading, improvement, refurbishment or alteration of the public water supply system or public sewerage system; The capital and operational expenses to be incurred for undertaking such activities

Individual licensee is responsible to carry out the activities set out in the approved business plan [Section 30]
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SURUHANJAYA PERKHIDMATAN AIR NEGARA

TECHNICAL REGULATION
Setting up Standards of Performance and Key Performance Indicators (KPIs) for water services and sewerage services licencees [Section 180(a)(iv)] Examples: Drinking Water Quality, NRW, Response time to
breaks, Low water pressure, Billing complaints

Allow only persons possessing qualification and holdings certificates to work, manage or operate water supply or sewerage system [Section 49] Allow use or supply of standard equipment, device, material, system or facilities [Section 129] Allow only contractors and plumbers who hold permit issued by SPAN to work on water supply or sewerage systems [Section 50] Approves plan for construction of any water supply and sewerage system [Section 45]
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SURUHANJAYA PERKHIDMATAN AIR NEGARA

QUALITY OUTPUT
The new regulatory regime is aimed to ensure:

QUALITY INPUT

QUALITY PEOPLE + PROCESS

QUALITY OPERATION & MAINTENANCE

QUALITY OUTPUT (INFRASTRUCTURE)

Quality Materials Products

Skilled, Competent Contractors Plumbers Standard, Proven Specification Procedures Best Practices

Efficient Operation Facilities Management and Maintenance

Quality & Reliable Infrastructure / Facilities

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SURUHANJAYA PERKHIDMATAN AIR NEGARA

CERTIFYING AGENCIES
SPAN may appoint Certifying Agencies (CA) for the purposes of:
a)

b) c)

Approving plans, specifications or detailed designs relating to construction of water supply / sewerage system Issuance of permits Certifying compliance with technical standards made under any subsidiary legislation.

Approval by the CA shall be deemed to be approval by SPAN Technical Audit will be carried out on CA to ensure compliance to standards and specifications [Section 174]
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SURUHANJAYA PERKHIDMATAN AIR NEGARA

SOCIAL REGULATION
SPAN shall designate Water Forum Main task is to protect the consumers interest Function of Water Forum includes: To give feedback and make recommendations to SPAN

on any matters concerning the interest of consumers of the water supply services and sewerage services; To represent the interest of consumers of the water supply services and sewerage services; To promote consumers interest in relation to the tariff and standards of water supply services and sewerage services;

SPAN shall have due regard to the recommendations of the Water Forum [Section 69]
SURUHANJAYA PERKHIDMATAN AIR NEGARA

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CONSUMER PROTECTION
Prepare consumer standards which include procedures for: reasonably meeting consumer requirements; the handling of customer complaints and disputes; the protection of consumer information. Consumer standard may address: provision of information to consumers regarding services

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rates and performances; service levels and quality of service to be provided to consumers; the provision of fault repair services; customer charging, billing, collection and credit practices; and any other matters of concern to consumers.

[Section 68]
SURUHANJAYA PERKHIDMATAN AIR NEGARA

ADDRESSING HIGH COST OF CAPEX REQUIREMENT THROUGH PAAB

1 Federal Government

Fund & Built

Dams
2

Ownership

Lease Lease Payment

(Based on affordability) 3

Bond / Capital market

Pengurusan Aset Air Berhad (PAAB)

Operators

1 Build asset WTP, Dist. Network etc.

Lease

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SURUHANJAYA PERKHIDMATAN AIR NEGARA

FUNDING OF WATER SERVICES INFRASTRUCTURE

CATCHMENT AREA

TR UN KM

AIN

TR IS D TI U IB

BALANCING RESERVOIR DAM RIVER WATER T/PLANT SERVICE RESERVOIR

N O M N AI
S E WE R S

CONSUMER SEWAGE T/PLANT RIVER

SOURCE

TREATMENT

DISTRIBUTION

COLLECTION

TREATMENT

Source Water Catchment

OWNERSHIP FUNDING CONSTRUCTION LEASEE REGULATION
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Dam Government

WTP / Reservoir / Distribution mains PAAB PAAB (New) PAAB (New) Service Licensee SPAN

Sewerage System

State State

Federal Government Fed Government/Private Federal Gov / Private Service Licensee SPAN SURUHANJAYA PERKHIDMATAN AIR NEGARA

Federal Government KTAK Service Licensee State

THE GOAL

Licensing

KPIs / Standards Water Forum

Regulated Tariff

Business Plan

Comparative Regulations / Benchmarking

Integration of Water & Sewerage Services

Adequate Funding

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SURUHANJAYA PERKHIDMATAN AIR NEGARA

THE GOAL

EFFICIENT, EFFECTIVE & SUSTAINABLE WATER AND SEWERAGE SERVICES

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SURUHANJAYA PERKHIDMATAN AIR NEGARA

OUTLINE OF PRESENTATION

1.

Strategic Initiatives for Reform

i. ii.

Legal and Regulatory Framework Policy and Institutional Framework

2. 3.

Role of SPAN after WSIA ACT 2006 Whats next?

31

SURUHANJAYA PERKHIDMATAN AIR NEGARA

TRANSITION AND MIGRATION

State Water / Sewerage Agencies / Board / Authorities

Register within 3 months, authorization issued (1 year)

Fail to register, authorization lapse

Apply licence after authorization expires

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SURUHANJAYA PERKHIDMATAN AIR NEGARA

TRANSITION AND MIGRATION

Concessionaires
Register within 3 months, (lodge agreement and supplementary agreement) Authorization issued for a period of 2 years Within 3 months after lodgement, commence renegotiation

(Contd)

Fail to register, authorization lapse

Within 1 year, send notice to indicate migrating or not Fail to renegotiate, authorization to be revoked or licence not granted

Migrate, licence issued

Not migrate, authorization issued until expiry of Concession Agreement

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SURUHANJAYA PERKHIDMATAN AIR NEGARA

THANK YOU

Daripada :

Suruhanjaya Perkhidmatan Air Negara

www.span.gov.my
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SURUHANJAYA PERKHIDMATAN AIR NEGARA