tan sri dato_ ir. hj zaini bin omar-strategic initiatives

SURUHANJAYA PERKHIDMATAN AIR NEGARA1

THE 4TH NATIONAL UTILITIES SUMMIT 2007

STRATEGIC INITIATIVES IN WATER SERVICES REFORM IN MALAYSIA

by: TAN SRI DATO’ IR. HAJI ZAINI BIN OMARChairman, National Water Services Commission (SPAN)28th - 29th August 2007Renaissance Hotel, Kuala LumpurMALAYSIA


1. Strategic Initiatives for Reformi. Legal and Regulatory Framework

ii. Policy and Institutional Framework

2. Role of SPAN after WSIA ACT 2006

3. What’s next?

OUTLINE OF PRESENTATION


AMENDMENT TO FEDERAL CONSTITUTION

Amendment to Federal Constitution pertaining to jurisdiction on water supply gazetted on 10 February 2005• Previously water supply was under State List• With amendment, water services and supplies are listed

under Concurrent List• Water source remains with State Government

Amendments to Federal Constitution 2005 enables Federal Government to regulate water services and State Government retains right to regulate raw water in the value chain of water cycle


SOURCE

DAM

RIVER

TREATMENT

WATER TREATMENT PLANT

BALANCINGRESERVOIR

DISTRIBUTION

SERVICERESERVOIR

TRUNK MAIN

DISTRIBUTION MAIN

CONSUMER

STATE

CATCHMENT AREA

Before Federal Constitution Amendment

WATER SUPPLY SYSTEM


SOURCE

DAM

RIVER

TREATMENT

BALANCINGRESERVOIR

DISTRIBUTION

SERVICERESERVOIR

TRUNK MAIN

DISTRIBUTION MAIN

CONSUMER

STATE FEDERAL

CATCHMENT AREA

WATER TREATMENT PLANT

After Federal Constitution Amendment

WATER SUPPLY SYSTEM


COLLECTIONTREATMENT

RIVER

SEWAGETREATMENT PLANT

Sewerage remains under the jurisdiction of Federal Government

PRIVATE CONNECTION

PIPE

PUBLIC SEWER

A) Individual Septic Tank

B) Connected System

PREMISE OWNER

PREMISE OWNER

SEPTIC TANK

SEWERAGE SYSTEM


An Act to provide for and regulate water supply services and sewerage services

Objective : to establish a licensing and regulatory framework for regulatory intervention to promote national policy objectives for the industry.

Does not affect general applications of existing laws on environment quality and land matters and existing State powers on water source.

Approved in Parliament in June 2006 and gazetted on 20th

July 2006

Date Act comes into force to be determined by the Minister

WATER SERVICES INDUSTRY (WSIA) ACT 2006 [Act 655]


National Policy Objectives for the Water Supply and Sewerage Services Industry are:

i. To establish a transparent and integrated structure for water supply services and sewerage services that delivers effective and efficient service to consumers;

ii. To ensure long term availability and sustainability of water supply including the conservation of water;

iii. To contribute to the sustainability of the watercourse and the water catchment areas;

iv. To facilitate the development of competition to promote economy and efficiency in the water supply services and sewerage services industry;

v. To establish a regulatory environment which facilitates financial self sustainability amongst the operator in the water services and sewerage services industry in the long term;

NATIONAL POLICY OBJECTIVES


vi. To regulate for the long-term benefit of the consumers;vii. To regulate tariff and ensure the provision of affordable

services on an equitable basis;viii. To improve the quality of life and environment through the

effective and efficient management of water supply services and sewerage services;

ix. To establish an effective system of accountability and governance between operators in the water services and sewerage services industry; and

x. To regulate the safety and security of the water supply system and sewerage system.

NATIONAL POLICY OBJECTIVES (Cont’d…)


An Act to establish the Suruhanjaya Perkhidmatan Air Negara –SPAN (National Water Services Commission) and set out the function and powers of SPAN which includes:

To advise the Minister on the national policy objectiveTo implement and enforce the provisions of WSIATo supervise and monitor water supply services and sewerage services activitiesTo review and recommend tariffs

SPAN is the economic and technical regulatorApproved by Parliament in June 2006 and came into force on 1 Feb2007Chairman and CEO appointed on 1 March 20078 other members appointed on 2 April 2007Temporary office at Ministry of Energy, Water and CommunicationsBlock E4/E5, Parcel E, Putrajaya MalaysiaA launching grant of RM20 million was received on 22 May 2007 for the setting up and initial operation

SURUHANJAYA PERKHIDMATAN AIR NEGARA ACT 2006 [Act 654]


Regulate the Water Services industry (Water and Sewerage services)

Regulatory mattersNational Water Services Commission (SPAN)

Ensures coordination with the various State Government in the management of the water basins.

Water Resource matters – Cross boundaries / Inter state / Issue of National interest

National Water Resource Council (NWRC) – chaired by Prime Minister

Regulate raw water abstraction and catchment management

Raw Water mattersState Government

Development of a holistic water policy for the country by setting policy directions.

Policy mattersFederal Government (Ministry of Energy, Water and Communications)

DESCRIPTIONAREA OF

RESPONSIBILITYBODY

POLICY & INSTITUTIONAL FRAMEWORK ON WATER SERVICES REFORM


SAJH

ESB

SWC

JKAS

JBAPP

BAKAJ

BKAM

JAK

ABASS

AKSB

SATU

JBATFRAGMENTED

NON-UNIFORM LEGISLATION

DIFFERENT KPIs

DIFFERENT RULES

DIFFERENT PROCEDURES

DIFFERENT LEVELS OF SERVICE

NON-UNIFORM TARIFF SETTING PRINCIPLES

CURRENT WATER REGULATORY REGIME IN MALAYSIA


SAJH

ESB

SWC

SPAN

SATU

• One regulatory body• Uniform legislation• Uniform regulation and

rules• Uniform tariff-setting

principles and procedures

• Standard Key Performance Indicators (KPIs)

• Standard Operating Procedures

• Standard product certification procedures

NEW WATER REGULATORY REGIME

ABASS


PENGERUSITan Sri Zaini Omar

INTERNAL AUDIT UNIT

CHIEF EXECUTIVE OFFICER

SURUHANJAYA PERKHIDMATAN AIR NEGARA1. Y.Bhg. Tan Sri Dato’ Ir. Hj. Zaini Omar (Chairman)2. Y.Bhg. Datuk Suboh Mohd Yassin3. Y.Bhg. Dato’ Ir. Syed Muhammad Shahabudin4. Y.Bhg. Dato’ Zulkifly Rafique5. Y.Bhg. Dato’ Ir. Sonny Cheah Lai Shin6. Y.Bhg. Datuk Marimuthu Nadason7. Y.Bhg. Prof. Dato’ Ir. Dr. Zaini Ujang8. Tn. Hj. Japar Abu9. Dr. Chin Yoong Kheong10. Y.Bhg. Dato’ Teo Yen Hua (Chief Executive Officer)

LEGAL AND SECRETARIAL

SERVICES DIVISION

RESEARCH, DEVELOPMENT AND INOVATION

DIVISION

LICENSINGAND TARIFF

DIVISION

DATA ANDINFORMATION MANAGEMENT

DIVISION

TECHNICAL STANDARD

AND COMPLIANCEDIVISION

CATCHMENT PLANNING AND

CONTROLDIVISION

TECHNICALSTANDARD

AND COMPLIANCEDIVISION

ECONOMIC AND SOCIALREGULATORY DEPARTMENT

(DIRECTOR)

CONSUMER AFFAIRS, MONITORING AND

ENFORCEMENT DIVISION

RESOURCEPLANNING

AND ENGINEERINGSERVICES DIVISION

SEWERAGE REGULATORYDEPARTMENT

(EXECUTIVE DIRECTOR)

REGULATORY REFORM

AND INTEGRATIONDIVISION

REGIONAL OFFICES

Northern, Central, Southern and Eastern

CORPORATE AFFAIRSDIVISION

HUMAN RESOURCE

UNIT

WATER REGULATORYDEPARTMENT

(EXECUTIVE DIRECTOR)

DEPARTMENT

DIVISION

UNIT

SURUHANJAYA PERKHIDMATAN AIR NEGARA (SPAN)ORGANISATION STRUCTURE





3. What’s next?



WHO ARE BEING REGULATED?

REGULATED BY SPAN

PUBLICWATER

OPERATORS

PUBLICSEWERAGEOPERATORS

PRIVATE WATER

OPERATORSPRIVATE

SEWERAGE OPERATORS

WATER CONTRACTORS

SEWERAGE CONTRACTORS

MANUFACTURERS / SUPPLIERS

PLUMBERS• 4,500 nos.

• 1,409 nos.

• 2,235 CIDB Reg.• 2,953 PKK Reg.

• 3,000 nos.

• 300 nos. (Sewerage Products)

• IWK, PBT Kelantan, PBT Pasir Gudang + MBJB

• 20 nos.


WATER OPERATORS

• Treatment and Distribution- Air Kelantan Sdn. Bhd.

(AKSB)- Perbadanan Bekalan Air

Pulau Pinang (PBAPP)

• Syarikat Air TerengganuSdn. Bhd. (SATU)

• Syarikat Air MelakaBerhad (SAMB)

• Jab. Bek. Air NegeriSembilan (JBANS)

• Lembaga Air Perak(LAP)

• Jab. Bek. Air Pahang• Jab. Bek. Air Labuan• Jab. Bek. Air Kedah• Jab. Kerja Raya Perlis

• Treatment only- SPLASH- Puncak Niaga (PNSB)- ABASS- Equiventure Sdn Bhd (ESB)- Southern Water Corp. (SWC)- Metropolitan Utilities (MUC)

• Distribution only- Syarikat Bekalan Air

Selangor (SYABAS)- SAJ

PRIVATE ENTITIESCORPORATE ENTITIES

GOVERNMENT ENTITIES


Final stage of study by consultantJBA Kedah

Initial stage of study by consultantJBA Labuan

Consultant appointed

Final stage of approval at EPU



STATUS

Corporatisation of all remaining states to be completed by the end of 2007

TARGETTED DATE

Unit Air JKR Perlis

JBA Pahang

JBA N. Sembilan

Lembaga Air Perak (LAP)

STATE WATER AUTHORITY

CORPORATISATION STATUS OF STATE WATER AUTHORITIES

SPAN does not promote privatization but instead promotescorporatisation of State Water Authorities to enable themto operate as efficient corporate entities


Efficientand

EffectiveWater Supply

Services

EconomicRegulation

EffectiveRegulation

ConsumerProtection

TechnicalRegulation

REGULATION FOCUS FOR REFORM UNDER WSIA ACT

SocialRegulation


ECONOMIC REGULATION

As an Economic Regulator, SPAN recommends to the Minister for the granting of:a) Individual Licence to:• Own a public water supply system or public sewerage

system or any part of the system; or• Undertake, provide or make available any water supply

services or sewerage services or part of the services by means of operating a public water supply system or public sewerage system

b) Class Licence to:• Own a private water supply system or private sewerage

system or any part of the systems; or• Undertake, provide or make available any water supply

services or sewerage services or part of the services by means of operating a private water supply system or private sewerage system

[Section 4 – 28]


ECONOMIC REGULATION

Approve 3 year rolling business plan and updated on an annual basis which details out:• The individual licensee’s plan for expansion,

maintenance, repairs, upgrading, improvement, refurbishment or alteration of the public water supply system or public sewerage system;

• The capital and operational expenses to be incurred for undertaking such activities

Individual licensee is responsible to carry out the activities set out in the approved business plan

[Section 30]


TECHNICAL REGULATIONSetting up Standards of Performance and Key Performance Indicators (KPIs) for water services and sewerage services licencees [Section 180(a)(iv)]

• Examples: Drinking Water Quality, NRW, Response time to breaks, Low water pressure, Billing complaints

Allow only persons possessing qualification and holdings certificates to work, manage or operate water supply or sewerage system [Section 49]

Allow use or supply of standard equipment, device, material, system or facilities [Section 129]

Allow only contractors and plumbers who hold permit issued by SPAN to work on water supply or sewerage systems [Section 50]

Approves plan for construction of any water supply and sewerage system [Section 45]


QUALITY OUTPUT

QUALITYPEOPLE +PROCESS

QUALITYINPUT

QUALITYOUTPUT

(INFRASTRUCTURE)

Quality• Materials• Products

Skilled, Competent

• Contractors• Plumbers

Standard,Proven

• Specification• Procedures• Best

Practices

The new regulatory regime is aimed to ensure:

QUALITYOPERATION &MAINTENANCE

Quality & Reliable

• Infrastructure / Facilities

Efficient• Operation• Facilities

Management and Maintenance

++ =


CERTIFYING AGENCIES

SPAN may appoint Certifying Agencies (CA) for the purposes of:

a) Approving plans, specifications or detailed designs relating to construction of water supply / sewerage system

b) Issuance of permitsc) Certifying compliance with technical standards made

under any subsidiary legislation.

Approval by the CA shall be deemed to be approval by SPAN

Technical Audit will be carried out on CA to ensure compliance to standards and specifications

[Section 174]


SOCIAL REGULATION

SPAN shall designate “Water Forum”• Main task is to protect the consumer’s interest

Function of Water Forum includes:• To give feedback and make recommendations to SPAN

on any matters concerning the interest of consumers of the water supply services and sewerage services;

• To represent the interest of consumers of the water supply services and sewerage services;

• To promote consumers interest in relation to the tariff and standards of water supply services and sewerage services;

SPAN shall have due regard to the recommendations of the Water Forum

[Section 69]


CONSUMER PROTECTION

Prepare consumer standards which include procedures for:• reasonably meeting consumer requirements;• the handling of customer complaints and disputes;• the protection of consumer information.

Consumer standard may address:• provision of information to consumers regarding services

rates and performances;• service levels and quality of service to be provided to

consumers;• the provision of fault repair services;• customer charging, billing, collection and credit practices;

and• any other matters of concern to consumers.

[Section 68]


PengurusanAset Air

Berhad(PAAB)

Federal Government

Build asset –WTP, Dist.

Network etc.

Operators

Lease

Lease Payment

Dams

(Based on affordability)Bond / Capital

market

Lease

Fund &Built

Ownership

ADDRESSING HIGH COST OF CAPEX REQUIREMENT THROUGH PAAB

3

1

2

12


FUNDING OF WATER SERVICES INFRASTRUCTURE

Service LicenseeService LicenseeService Licensee-LEASEE

SPANSPANStateStateREGULATION

Source

PAAB (New)

PAAB (New)

PAAB

WTP / Reservoir / Distribution mains

Federal Gov / Private

Fed Government/Private

Federal Government

Sewerage System

-

-

State

Water Catchment

GovernmentOWNERSHIP

Dam

KTAKCONSTRUCTION

Federal GovernmentFUNDING

RIVER

SOURCE

DAM

RIVER

TREATMENT

WATER T/PLANT

BALANCINGRESERVOIR

DISTRIBUTION

SERVICERESERVOIR

TRUNK MAIN DISTRIBUTION MAIN

CONSUMERSEWAGET/PLANT

SEWERS

CATCHMENT AREA

COLLECTION TREATMENT


THE GOAL

Licensing

Business Plan

Water Forum

AdequateFunding

Integration of Water

&

Sewerage Services

Comparative Regulations /

Benchmarking

KPIs / Standards RegulatedTariff


THE GOAL

EFFICIENT, EFFECTIVE & SUSTAINABLE WATER AND

SEWERAGE SERVICES





3. What’s next?



Register within 3 months, authorization

issued (1 year)Fail to register,authorization

lapse

Apply licence afterauthorization expires

State Water / Sewerage Agencies / Board /

Authorities

TRANSITION AND MIGRATION


Fail to register,authorization

lapse

Within 3 months after lodgement, commence

renegotiation

Fail to renegotiate,authorization to be revoked or licence

not grantedMigrate, licence issued Not migrate, authorization

issued until expiry of Concession Agreement

Register within 3 months, (lodge agreement and

supplementary agreement)

Concessionaires

Within 1 year, send notice to indicate migrating or not

Authorization issued for a period of 2 years

TRANSITION AND MIGRATION (Cont’d)


Suruhanjaya Perkhidmatan Air Negara

THANK YOU

Daripada :

www.span.gov.my

tan sri dato_ ir. hj zaini bin omar-strategic initiatives

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