MOU On Treated Water From Perak: RM210 Mln Annual Capacity Charge Competitive - Exco

GEORGE TOWN, Nov 19 (Bernama) -- The cost offered through the Memorandum of Understanding (MoU) for the supply of treated water from Perak to Penang by the Perak State Development Corporation with Gamuda Berhad JV (PKNPk-Gamuda JV) of RM210 million per year is competitive.

State Infrastructure, Transport and Digital Committee chairman Zairil Khir Johari said the Penang Water Supply Corporation Sdn Bhd (PBAPP) had conducted due diligence by comparing the cost if it were built on a Build-Operate-Transfer (BOT) basis as used for the construction of the Sungai Muda Water Treatment Plant (WTP) and the Sungai Perai WTP which are currently being developed.

“PBAPP found that the cost offered by PKNP Gamuda JV was competitive after taking into account all costs including the cost of constructing the WTP, land acquisition, the pipe system that needs to be connected from the WTP around Bukit Merah to Sungai Kerian in Penang, financial costs including loan interest, maintenance costs and infrastructure upgrades for 40 years.

“The annual capacity charge of RM210 million will be borne by PBAPP as part of the water purchase cost, it is part of the operating expenditure (OPEX),” he said when winding up the debate on the Supply and Development Estimates Bill 2026 (State Budget 2026) at the State Legislative Assembly sitting today.

He informed that the capacity charge was imposed by the state of Perak because all the costs of treated water infrastructure had to be borne by them for the construction of the WTP with a capacity of 500 million litres per day (MLD) which was built specifically for Penang use.

On Nov 6, PKNPk-Gamuda JV and PBAPP signed an MoU for the sale of surplus treated water from the Northern Perak Water Supply Scheme (NPWSS) to Penang.

Commenting further, Zairil said that the technical details of the MoU included an annual capacity charge of RM210 million per year, as well as a treated water supply charge of RM1.70/m3, a minimum supply quantity of 300 MLD and a 40-year agreement period with a rate review in the 21st year.

He also explained that the MoU was non-binding and aimed to explore the potential for long-term business cooperation involving the sale, provision and purchase of water from Perak.

“This MoU will be followed by a discussion and negotiation session, before an official agreement is signed and the official agreement will later require approval from various parties including the board of directors, shareholders, financial institutions, authorities such as the National Water Services Commission (SPAN) and Bursa Malaysia,” he said.

Zairil also said that PBAPP buys water from Perak not for its own use, but will instead be sold to consumers including non-domestic consumers such as in the Seberang Perai Selatan (SPS) industrial area which is rapidly developing, hence there is no issue of capacity charge storage.

For the water project from Sungai Perak, he said the federal government will bear the cost of an estimated RM5 billion to build infrastructure for the intake and transfer of raw water from the downstream of the Chenderoh Dam to Bukit Merah via a tunnel through the hill while the cost of treated water infrastructure such as WTP and pipes to Penang is the responsibility of the state.

The assembly sitting continues tomorrow.

-- BERNAMA