George town: The Memorandum of Understanding (MoU) signed for the supply of treated water from Perak to Penang, with an annual capacity charge of RM210 million, has been deemed competitive. This agreement was made between the Perak State Development Corporation in collaboration with Gamuda Berhad Joint Venture (PKNPk-Gamuda JV) and the Penang Water Supply Corporation Sdn Bhd (PBAPP).
According to BERNAMA News Agency, Zairil Khir Johari, the chairman of the State Infrastructure, Transport and Digital Committee, stated that PBAPP conducted a thorough financial evaluation. This assessment involved comparing the cost with the Build-Operate-Transfer (BOT) model used for other water treatment projects. The evaluation took into account various factors, including construction, land acquisition, and financial costs, establishing the competitiveness of the RM210 million annual charge.
The capacity charge will be part of PBAPP’s operating expenditure, covering the cost of infrastructure developed by Perak for a water treatment plant with a capacity of 500 million litres per day. This plant is specifically designed for Penang’s use, and the charge was deemed necessary due to the comprehensive infrastructure costs borne by Perak.
On November 6, a significant step was taken when PKNPk-Gamuda JV and PBAPP signed the MoU to facilitate the sale of surplus treated water from the Northern Perak Water Supply Scheme (NPWSS) to Penang. The technical aspects of the MoU include a treated water supply charge of RM1.70 per cubic meter, a minimum supply quantity of 300 MLD, and a 40-year agreement period with a rate review in the 21st year.
Zairil further explained that the MoU is non-binding and serves to explore the potential for long-term business cooperation. The next phase involves discussions and negotiations leading to an official agreement, which will require approvals from various stakeholders, including regulatory and financial institutions.
Additionally, the treated water purchased from Perak by PBAPP is intended for distribution to consumers, including industrial users in the rapidly developing Seberang Perai Selatan (SPS) area, ensuring there is no issue regarding capacity charge storage.
For the water project involving Sungai Perak, the federal government will contribute an estimated RM5 billion for infrastructure to facilitate raw water intake and transfer. Meanwhile, the responsibility for treated water infrastructure falls on the state.
The legislative assembly session is set to continue tomorrow.