AIR Selangor’s revenue has increased by 12.5% from RM2.2bil in 2022 to RM2.5bil in 2023 following tariff adjustments for domestic and special categories that were implemented in August 2022, says Datuk Seri Amirudin Shari.
Despite the revenue increase, the Selangor Mentri Besar stressed that the water operator’s costs had also increased at a rate of 8.7% from RM3.2bil to RM3.5bil because of the rise in private, additional or external costs associated with production, leases and loans.
“The increase in loan costs were due to the increase in the amount of murabah sukuk issued to finance the cost of upgrading water infrastructure from RM3.4bil to RM5.1bil.
"At the same time, electricity costs have also increased following the Imbalance Cost Pass-Through (ICTP) imposed by Tenaga Nasional (TNB)," he said at the Selangor state assembly sitting at Bangunan Dewan Negeri Selangor in Shah Alam Wednesday (Nov 27).
ICPT is a mechanism implemented since 2014 to reflect changes in the cost of electricity generation, specifically fuel costs every six months.
“Costs for maintenance and repair of water distribution assets have also increased following efforts to deal with leakages and non-revenue water (NRW).
“So far, the water operator has recorded a loss of RM610mil after tax which is a reduction from the RM1.1bil recorded in 2023.
“Currently, the average selling price of water in 2023 has increased from RM1.59 per cubic meter in 2022 to RM1.76 per cubic meter.
"However, the average selling price of water is still low compared to the cost of one cubic meter of water which amounts to RM2.55 per cubic meter.
"The average interest rate for all Air Selangor loans is 4.49%.”
Amirudin was replying to a question from Rajiv Rishyakaran (PH-Bukit Gasing) on the financial performance of the largest water services provider in Malaysia, its current average selling and cost prices for every cubic metre and the average interest rate for all its loans.
When asked if there will be further hikes in water tariffs to cover its losses, Amirudin said a business plan had been sent to the National Water Services Commission (SPAN) where specific dates and period when Air Selangor will make a profit from operations had been set.
As the tariff adjustment was only implemented in 2022 and 2023, Air Selangor can only be expected to record profits by 2031.
After 2031, it is forecasted that Air Selangor will have a margin rate of RM200mil based on tariff adjustments but this process will need the unanimous agreement of all the state governments.
“This is Air Selangor’s biggest challenge but it is ready to face or absorb the impact.
"The tariff hike process will involve the industries first with the domestic sector coming in as the last option.
"As it is, the Energy Transition and Water Transformation Ministry is conducting studies to impose higher charges for industries that use a high amount of energy. Among the sectors that are often mentioned are data centres,” he said.
He added that Air Selangor has also obtained grants in the past for reducing NRW over the years.
“The current rate of NRW is 27.2% and we are on the right track to reach our target of 27% in 2024.
"If we achieve this target in 2024, we will get around RM200mil in grants from SPAN and PETRA,” he said.
