As usual I have to give credit to my sifoo Uncle Fuad Omar for his brilliant explanation on the issue of water crisis in Selangor . Though we are in the different engineering background (uncle Fuad (civil engineer)& me(mechanical engineer),the engineering fundamental itself bring us together in this issue and somemore both of us studied in UTM, which make him my super duper senior. I just hope the first GPRS road tour in Beranang will be an eye opener to the public and hopefully they will bring him in the next tours. The explanation is quite straight forward, complete with facts ,some more blend with his experience in the water management ,public should not have any problem to understand. There's no room for facts spinning. This is what I get from his facebook status which I believe should be spread out for the sake of public awareness on how water tariff determined. If you have any problem to understand, you might want to contact him directly via his facebook at http://www.facebook.com/fuad.omar.716
To work out tariff (power, water or even toll for that matter) is a techno commercial process in strict compliance to professional prudent practices....having done that say the answer is A, then comes the next level i.e to decide the tariff....the Political Will takes over based on "affordability" and normally the socio - political economic parameters will be considered, then the answer is B....and in all cases(base on my experience in govt & corporate sector) B is less than A, say C....and C is the amount to be subsidised by the Federal Govt..
With C in mind...we go back to the Financial Model and go thru to all parameters (normally more than 100 parameters) and take note on all relevant parameters which the Federal Govt can helped out such as:-
1 - Fuel price for power plants.
2 - CAPEX thru PAAB for water supply
3 - Guarantied traffic flow for highway
4 - Taxes
5 - Equity from Govt investment arm (PNB, LTH, EPF, LTAT, KWAP, Amanah Raya etc etc) to attract cheap financing and higher rating by Rating Agency
6 - Longer Concession Period
7 - Govt backed financing thru GOC/GLC (in water its PAAB)...and this add up to Hutang Negara which again being exploited to the maximum
etc etc etc....until all the parameters are exhausted.
Once we finalised the C...then only the D comes in the "Affordable Tariff" itself..
So..there is no fast rule when it comes to "reasonable tariff"... its a very messy process..
And this the very basis of Privatisation that has been in practice since Dr M embarked on it more than 20 years ago...
- Fuad Omar -
Anyway , end of the day people still prefer 'free water' this include all those rich people. What do u think the value of RM 10 for rich people and average/lower income rakyat ? Currently under PR free water policy rich people rich people also enjoy the benefit . Wouldn't it be great if their portion channeled to something more productive ? Such as maintenance of water utilities it self ?