Govt will ensure water utilities meet targets after tariff adjustments
The Energy Transition and Water Transformation Minister added that the National Water Services Commission (SPAN) plays a crucial role in assisting state-level utilities by regulating and considering applications for tariff increases.
ALSO READ: Water rate hike to benefit companies in sector
"To ensure a reliable supply of clean water, operational and capital expenditure costs are the main issues faced by water supply companies," said Fadillah during the Minister's Question Time at the Dewan Rakyat on Thursday (Aug 7).
He was responding to a question by Datuk Mohd Isam Mohd Isa (Barisan-Tampin) about the monitoring and auditing mechanisms for additional revenue from water tariff adjustments and actions against operators failing to meet KPIs post-adjustment.
Fadillah explained that many companies struggle to cover these costs due to low tariff rates, prompting regular tariff reviews every three years.
He added that all states, except Perak, submitted applications for tariff adjustments, which SPAN approved based on specific justifications.
ALSO READ: Anwar questions double standards over water tariff hikes
Fadillah emphasised that these adjustments come with stringent Key Performance Indicators (KPIs) that companies must meet.
"In cases where KPIs are not met, operators can face penalties under the law, including fines and imprisonment," he said.
He added that before any legal action is taken, SPAN will issue a warning to non-compliant companies, granting them six months to fulfil the KPIs.
He highlighted the importance of performance-based licensing, noting that water utility licences are reviewed every five years, with good performers having their licences extended for the full term.
'Conversely, poor performers face shorter extensions and, in severe cases, non-renewal of their licences.
"If a company consistently fails to meet KPI standards, their licence may not be renewed, and the state government will need to appoint a more capable operator," Fadillah said.
Last month, SPAN received applications from service operators in 10 states, including Penang, Perlis, Kedah, Kelantan, Terengganu, Selangor, Negeri Sembilan, Melaka, Johor, and Pahang.
Earlier this month, households using between 20 to 35 cubic metres (m3) of water monthly in Selangor, Kuala Lumpur, and Putrajaya will now pay RM1.62/m3, an increase of 30sen effective September 1 this year.
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