WATER ASSETS TAKEOVER GOOD FOR THE STATES

PUTRAJAYA, Jan 21(Bernama) -- The Federal government taking over water
assets from the states benefits them and the people, said Deputy Prime Minister
Najib Razak.

Najib, who is also Finance Minister, said the restructuring of water supply
services in the various states through the Federal government taking over the
assets would absolve them debts totalling RM7.6 billion (US$2.09 billion).

Besides this, he said the Federal government would be able to ensure stable
supply of clean water and avoid supply crises in the future.

"They transfer the assets to the Federal government, in return we will bear
capital expenditure or operational expenditure, which translates to huge sums.

"The state governments cannot afford to incur such huge expenditures because
their water revenue is insufficient like Negeri Sembilan. If not checked, the
states' debts because of this will keep increasing," he told reporters after
witnessing the hand over of documents for the restructuring of water supply
services for southern state of Negeri Sembilan, here Tuesday.

Negeri Sembilan became the second state after Melaka to hand over its water
assets to enable restructuring of its water supply services. Under the
agreement, its RM1.21 billion (US$333.8 million) water assets will be taken over
by Pengurusan Aset Air Berhad (Water Asset Management Company or WAMCO).

Earlier, in his speech, Najib said restructuring of water supply services in
the states was necessary as the Federal government stressed on the need to have
integrated water resources management and conservation of the environment.

"I am confident under this concept, water will be managed well and in a
holistic manner at all levels of the supply chain," he said.

He said this was important as demand for the precious commodity for domestic
and industrial use would double in the next 50 years and if seen from the
distribution standpoint, it would involve over 105,000 kilometres of pipelines
across the country.

"But it must be noted, 42 per cent of the existing pipelines are of the
cement asbestos type which are more than 30 years old and have to be replaced to
improve distribution to the consumer," he said.

On Tuesday's restructuring agreement with Negeri Sembilan, Najib said in
return for the water assets transferred, WAMCO will assume the outstanding water
debt obligations of the state.

"Syarikat Air Negeri Sembilan (the state water company) will transfer to
PAAB (WAMCO) ownership of 26 treatment plants, 430 water tanks, 126 booster
stations and 6,408km of clean water mains," he said.

However, he said 60 per cent of the mains were of the cement asbestos type
which caused the rate of non-revenue water (NRW) to deteriorate from 53 per cent
in 2005 to 60 per cent in 2006.

"The NRW rate in Negeri Sembilan is among the highest in the country and is
way above the average rate of 37.7 per cent. God-willing, through the
restructuring, we will be able to overcome this problem," he said, adding that
he hoped other states would follow in the footsteps of Negeri Sembilan and
Melaka states after this.
-- BERNAMA