TARIFFS AND

PRICING
C H AL L E N GE S OF WATE R P RIC IN G: M AL AY SIA

ECW 717
Water Resources Planning & Management
Prepared by: GROUP 2
NAME

STUDENT ID

AHMAD KAMIL BIN MOHAMED ALAUDDIN

2015113727

KHADIJAH BINTI MOHAMAD ARIS

2015655236

MADELINA ANAK COSMAS PANGGIE

2014981023

NORASHIKIN BINTI MAT DAMIN

2015109311

ROSILA BINTI SHAKRI

2015073291

Prepared for Dr. Jazuri Abdullah and Dr. Suzana Ramli

Challenges of Water Pricing: MALAYSIA

Scope
of
Study

OBJECTIVES
WAT E R P R IC IN G

WHY SETTING TARIFF IN WATER?

People not aware of the real costs of providing water and
sanitation services.

Water is a social good and it was considered cheap and

abundant resources.

Always idea water should be free or we should not charge

people in order to help, especially the poor but water only can
be free if there is abundant of supply.

However, with population growth and much larger communities

WHY SETTING TARIFF IN WATER?

Proper water tariffs provide incentives to improve sustainable
water and sanitation services and to use water resources more
efficiently.
Tariffs generate revenue to recover specific costs.
Tariffs generate revenues to recover specific costs especially
on operation, maintenance and generate funds for
infrastructure development and expansion.
Reluctance of many governments to price water like other

WHY SETTING TARIFF IN WATER?

Water should be treated as a socio economic good with a
positive pricing where there is competing demand and
finite supply.

Wrong pricing of water will lead to misallocation of

resources.
Having pay for water can encourage people to reduce
wasting water

TYPES OF WATER
TARIFFS
WAT E R P R IC IN G

TYPES OF WATER TARIFFS

Consumers monthly
water bill is based on a
single type of
calculation

Consumers monthly
water bill is based on
the sum of two
calculations

Source: Asia Water

SINGLE PART
TARIFFS

FIXED CHARGE
Consumers monthly bill are fixed regardless of the
volume used.
Possible for application with the absence of metering
(common in multi-storey apartment buildings due to its
unmetered connections).
Domestic use

Tariff (shilling)

Tariff (USD)

1 tap

2310

3.75

2 4 taps

11088

10.56

5 - 8 taps

18480

17.6

Over 8 taps

27720

26.4

Example: Tariff Schedule in Uganda (April 1995)

Source: Vilcara and Karina , 2009

SINGLE PART
TARIFFS

VOLUMETRIC CHARGE

Block Tariff

Uniform Volumetric
Charge

Households water bill = quantity

used x price per unit of water.
Advantages: Easier for consumer to
understand without ambiguous
factors

4th Block
Block Tariff Structure for Water in Pahang
(2015)

IBT
(Increas
ing
Block
Tariff)

2nd Block
8.11
to 18
0.6
m3
0.4
(RM 0.37)
1st Block
0.2to 8 m3
0 (RM 0)

8.1

8.1

Example: India

City

18

18

45.01 m3
and above
(RM 0.99)

45

45

60

Quantity (m3)

Water Tariff
(Rupees per
kL*)

Kanpir

2.0

Surat

2.0

Madurai

2.0

*kL = kilolitre

3rd Block
18.01 to 45 m3 (RM
0.79)

1
Price
(MYR per m3)
0.8

DBT
(Decreasing
Block Tariff)

1
0.8
Price ($/m3)
0.6
0.4
0.2
0
0

10

10
20
Quantity (m3)

Source:

20

30

TWO PARTS
TARIFF

HYBRID

Water
use
charge

Two
Parts
Tariffs

(Volumet
ric tariff)

Fixed
Charge

Example: Tariff Structure in San Julian

El Savador
IBT (Increasing
Block Tariff)
Fixed
Consumpti
on m3 per
month

Tariff
(USD per
m3)

1 Block

1 to 20

2nd
Block

20.01 to 30

3
Block

30.01 to 40

Water
st

rd

th

Charge
Other Charges

Charge
(USD)

0.08

System
depreciation

1.10

0.14

Maintenance

1.44

Sewerage system

0.57

0.23

Total Fixed
3.11
Charge
Source: Vilcara and Karina, 2009

CHALLENGES
WAT E R P R IC IN G

WATER
WATER
GOVERNANC
GOVERNANC
EE

FUNDING OF
INFRASTRUCT
URE
Heavily depends
on government
funding

UNDERTAKING
OF
COMMERCIAL
LOANS
Allowed due to
lack of funding
from
government

PRIVATISATION
Allowed to take
on various parts
of water
services based
on concessions

PRE
PRE/ /POST
POST
PROJECT
PROJECT

PROJECT/WOR
K PLANNING

PROJECT
PROCUREMENT

Not well planned

/ scrutinised

1. No tight
control/supervis
ion
2. Corruption

MONITORING
POST PROJECT
Non Revenue
Water

STRATEGIC
APPROACH
WAT E R P R IC IN G

Reformation
Towards achieving sustainability and
efficiency

Before WSIA
> Water Services & Resources
carried by State Government

Amendments to Federal
Constitution

> Water Services by Federal Government

> Water Resources by State Government

FEDERAL CONSTITUTION
(amended and gazette on 10 Feb 2005)
Water Services
Industry Act (WSIA)
National Water
Services Commission
Act (SPAN)
Governing water
industry service

Federal Laws On
Environment,
Building, Health etc.

State Water
Enactment (raw
water)

Federal Departments

State Water
Department

Governing
environment,
building, health

Governing water
basin, extraction &
conservation of raw
water supply

After Reformation
Clear & Distinctive Roles

Federal Government
Setting policy directions

State Government
Manage water basins (protect quality and
identify new basins)

National Water Resources

Council
Ensure coordination with various State
Government
SPAN
Regulate the water services industry
based on policy directions

Operators
Consolidated operator
for the state
Licensed by SPAN
KPI set to ensure
efficient and effective
service delivery

WATER TARIFF IN MALAYSIAS

STATES
WAT E R P R IC IN G

WATER INSTITUTION
More states have opted to establish water supply companies via
corporatization.

Some states have fully privatized the provision of water services.

A few states have chosen a dual structure water system

water distribution by state agencies
water treatment privatized via concessions

In some cases, the state government continues to hold equity in

the privatized water entities
Source : Casey Lee, 2005

WATER TARIFFS IN MALAYSIAS STATES

SE L AN GO R , KUA LA LU MPU R &
P U T R A JAYA
S U P P L I E R:
S YA R I KAT B E KA L A N
A I R S E L A N G O R ( S YA B A S )

Minimum Payment =RM6.00

PE R A K
S U P P L I E R:
L E M B AG A A I R P E RA K ( L A P )

Minimum Payment =RM3.00

Consumptions
(m3)

Price (RM)/
m3

Consumptions
(m3)

Price (RM)/
m3

0 20

RM0.57

0 10

RM0.30

21 35

RM1.03

11 20

RM0.70

Over 35

RM2.00

Over 20

RM1.03

Average monthly water bill (22.5m3) =

RM13.98

Average monthly water bill (22.5m3)

= RM12.6

(the average monthly figure as reported by SPAN)

WATER TARIFFS IN MALAYSIAS STATES

PA H A N G
S U P P L I E R:
P E N G U R U S A N A I R PA H A N G B E R H A D ( PA I P)

Minimum Payment =RM3.00

N E GE R I SE MBI LA N
S U P P L I E R:
S YA R I K AT A I R N E G E R I
SEMBILAN (SAINS)

Minimum Payment =RM5.00

Consumptions
(m3)

Price (RM)/
m3

Consumptions
(m3)

Price (RM)/
m3

0 18

RM0.37

0 20

RM0.55

19 45

RM0.79

21 35

RM0.85

Over 45

RM0.99

Over 35

RM1.40

Average monthly water bill (22.5m3) =

RM10.22

Average monthly water bill (22.5m3)

= RM13.0

(the average monthly figure as reported by SPAN)

WATER TARIFFS IN MALAYSIAS STATES

JO H O R
S U P P L I E R:
S YA R I KAT A I R J O H O R ( S A J )

Minimum Payment =RM7.00

KE LA N TA N
S U P P L I E R:
A I R K E L A N TA N S D N B H D)

Minimum Payment =RM4.50

Consumptions
(m3)

Price (RM)/
m3

Consumptions
(m3)

Price (RM)/
m3

0 20

RM0.80

0 20

RM0.45

21 35

RM2.00

21 35

RM0.87

Over 35

RM3.00

Over 35

RM1.42

Average monthly water bill (22.5m3)

plus minimum payment = RM21.00

Average monthly water bill (22.5m3) =

RM11.40

(the average monthly figure as reported by SPAN)

WATER TARIFFS IN MALAYSIAS STATES

T E R E N G GA N U
S U P P L I E R:
S YA R I KAT A I R T E R E N G G A N U S D N B H D (
S AT U WAT E R)

Minimum Payment =RM4.00

Consumptions
(m3)

Price (RM)/
m3

0 20

RM0.42

20.1 40

RM0.65

40.1 - 60

RM0.90

Over 60

RM1.00

Average monthly water bill (22.5m3) =

RM10.00

KE D AH
S U P P L I E R:
S YA R I K AT A I R DA R U L A M A N ( S A DA )

Minimum Payment =RM6.00

Consumptions
(m3)

Price (RM)/
m3

0 20

RM0.40

21 35

RM0.70

Over 35

RM1.10

Average monthly water bill (22.5m3) =

RM12.25

(the average monthly figure as reported by SPAN)

WATER TARIFFS IN MALAYSIAS STATES

PE R L IS
S U P P L I E R:
S YA R I KAT A I R P E R L I S ( S A P)

Minimum Payment =RM3.00

P U L AU P IN A N G
S U P P L I E R:
P E R B A DA N A N B E KA L A N A I R P U L A U
PINANG SDN BHD (PBAPP)

Minimum Payment =RM2.50

Consumptions
(m3)

Price (RM)/
m3

Consumptions
(m3)

Price (RM)/
m3

0 15

RM0.40

0 20

RM0.22

16 25

RM0.70

21 40

RM0.46

Over 25

RM1.10

41 60

RM0.68

61 - 200

RM1.17

Over 200

RM1.30

Average monthly water bill (22.5m3) =

RM11.30

Average monthly water bill (22.5m 3) =

(the average monthly figure as reported by SPAN
RM5.55

WATER TARIFFS IN MALAYSIAS STATES

ME L AKA
S U P P L I E R:
S YA R I KAT A I R M E L A K A B E R H A D ( S A M B )

Minimum Payment =RM6.00

SA B A H
S U P P L I E R:
S A B A H S TAT E WAT E R D E PA RT M E N T

Minimum Payment =RM3.00

Consumptions
(m3)

Price (RM)/
m3

0 10

RM0.22

Consumptions
(m3)

Price (RM)/
m3

0 20

RM0.60

11 20

RM0.46

21 35

RM0.95

Over 35

RM1.45

21 35

RM0.68

36 60

RM1.17

Over 60

RM1.30

Average monthly water bill (22.5m3) =

RM14.40

Average monthly water bill (22.5m 3) =

(theRM11.80
average monthly figure as reported by SPAN)

WATER TARIFFS IN MALAYSIAS STATES

SA RAWA K
SUPPLIERS:
KUCHING: KUCHING CITY WATER BOARD (KWB)
SIBU: SIBU WATER BOARD (SWB)
MIRI, BINTULU, AND LIMBANG,: LAKU MANAGEMENT

These rates only apply to Kuching, Sibu, Sri Aman, Miri,

Limbang, Sarikei and Kapit.
Minimum Payment = RM4.40

State

Average Monthly
Bill
(in RM)

Kuala Lumpur

15.4

Selangor

15.4

Perak

12.6

Pahang

10.2

Negeri Sembilan

13

Johor

21

Kelantan

11.4

Consumptions
(m3)

Price (RM)/
m3

Terengganu

10

0 15

RM0.48

Kedah

18

Perlis

11.3

16 50

RM0.72

Penang

Over 50

RM0.76

Malacca

14.4

Sarawak

12.6

Sabah

11.8

Average monthly water bill (22.5m3) = RM12.6

CONCLUSION
WAT E R P R IC IN G AN D TARIFF

CONCLUSION
Many of the larger and more-developed states has opted
to privatize the provision of water services in an attempt
to improve such services.

Subsidies should be targeted to the low-income and no

income household.

Pricing reforms are most likely to be successful if there is

greater public awareness of water challenge and water
management.
Source: Asia Water 2016

REFERENCES
https://
ringgitplus.com/en/blog/Household-Budgeting/How-Much-Does-Water-Cost
-in-Malaysia.html
http://www.sswm.info/content/water-pricing-general
Vilcara. V and Karina. J (2009). Water Tariffs in Developing Countries: A
Case Study in Lima, Peru.
Official Portal Ministry of Natural Resources and Environment (NRE).
(n.d.). Retrieved April 18, 2016, from http://www.nre.gov.my/enmy/Water/Pages/default.aspx
Suruhanjaya Perkhidmatan Air Negara. (n.d.). Retrieved April 17, 2016,
from http://www.span.gov.my/
N.W Chan (2009), Issues and Challenges in Water Governance in
Malaysia

THANK YOU