The chief minister says the state government will not have to pay compensation if the National Water Services Commission does not approve the agreed charges.
He said the 40-year agreement was still subject to approval of the agreed charges by the National Water Services Commission (SPAN).
His assurance comes after five independent directors of PBA Holdings Bhd (PBAHB), Penang’s Bursa-listed water company, raised concerns over payments that could still be due if water supplies from Perak were disrupted.
Chow said Perak’s water supplier, a joint venture between Perak State Development Corporation and Gamuda Bhd (PKNPk-Gamuda JV), has until 2035 to secure SPAN’s approval for the charges.
“If they cannot achieve that, we can say that we will walk away,” he said after PBAHB’s extraordinary general meeting today.
In a handout, PBAHB said 97.9% of the votes cast at the meeting, attended by 161 shareholders, were in favour of the deal.
The vote fulfils one of two conditions needed for the agreement to proceed, the other being SPAN’s approval of the agreed charges.
PBAHB CEO K Pathmanathan said the company would not have to pay compensation if approval was not obtained, adding that PKNPk-Gamuda JV would bear the cost of building the water treatment plant.
The five directors had raised concerns about PBAHB’s financial obligations if water supplies were interrupted after the agreement took effect.
Chow said he acknowledged their concerns, adding that the board had spent about a year discussing the agreement’s terms.
Penang is expected to begin receiving water from Perak on March 31, 2032, with the option to increase purchases to 500 million litres daily to prevent future shortages as Penang’s population and industries grow.
Under the deal, the state must pay an annual capacity charge of RM210 million to keep the Perak water treatment facilities running, in addition to a treated water charge of RM1.70 per cubic metre (1,000 litres), subject to review every three years.
This means Penang will pay about RM396 million a year even if it buys only the minimum 300 million litres a day. The deal is expected to cost RM24.6 billion over 40 years, covering both water purchases and fixed charges for treatment capacity.
PBAHB is also expected to spend about RM400 million on pipelines and other facilities to distribute the water within Penang.
The state currently gets about 80% of its raw water from Sungai Muda, which it shares with Kedah, making it vulnerable to shortages during prolonged dry spells. - FMT
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