Perak Water Board – Doing it right the first time

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By James Gough

Sultan Azlan Shah Dam, Ulu Kinta

The Perak Water Board which manages the supply of clean water to consumers at urban and rural areas as well as to the commercial and industrial sectors was recently praised by Perak Menteri Besar Datuk Seri Dr Zambry Abdul Kadir as being “one of the best governmental agencies in the country”. At his speech made during the LAP Employees Union AGM, Zambry stated that the Board had recorded a profit of RM104 million from revenue of RM275.46 million for 2011. Its 2010 profit was RM100 million from revenue of RM270.67 million. According to Zambry, this is a performance which exceeds the target originally set for the year 2020. Intrigued by the Boards’ consistent excellent performance and equally consistent good annual bonus handouts’, Ipoh Echo decided to find out just what made this GLC “tick”.

Sultan Azlan Shah Dam

“One of the best governmental agencies in the country” – Zambry

Perak Water Board
Dato’ Ir Mohd Yusof, PWB General Manager

For its achievement Zambry announced a four and a half month bonus for the Board’s 1,100 employees given for “its excellent performance”, which according to its General Manager, Dato’ Ir Mohd Yusof Mohd Isa, PWB has been paying bonuses since 1999.

Operations Structure
A quick snapshot of the State’s water supply structure revealed that the total area of Perak is 21,005 km2 and PWB has 11,098 km2 of water catchment areas or over 55% of the state’s land under its jurisdiction. Its main source of raw water is from the Perak River followed by mountain water.It has two dams, the Sultan Azlan Shah Dam at Ulu Kinta, Ipoh and at Air Kuning Taiping.

The state is geographically divided into five regions and has a total of 47 water treatment plants. It has a capacity to treat 1,774 mld (million litres per day). It currently produces 1,081 mld with a consumption of 763 mld. Its current Non Revenue Water is averaging at 30.4%. The Board has laid out 10,792 km of piping, distributing clean water to 100% of the urban locations and 98% of rural areas.

Air Kuning Dam, Taiping

Perak Water Board – Then and Now
Prior to 1980 the distribution of clean water supply was managed by the Public Works Department (PWD) or Jabatan Kerja Raya (JKR). Besides the section on water management, PWD also was responsible for the maintenance of roads and buildings. Overall each of the 10 Districts in the State was managed by the District Officer and assisted by JKR’s District Engineer.

It was during the 70s that the need arose to expand the water supply services throughout the state. Funding for the state’s expansion projects then was obtained through the Asian Development Bank (ADB). JKR’s engineering superintendent at the time Dato’ Chan Kok Pew, generally oversaw the setting up of the infrastructure of the projects and one of the early projects funded by ADB was the Greater Ipoh Water Supply Project 2 which was initiated to meet the increasing water supply needs of the Greater Ipoh area.

At that time, water supply from Ipoh was sourced from the Kinta River. The new project involved the extraction of water from the Perak River at Parit from where it would be pumped to reservoirs for distribution to the Greater Ipoh area. The demand for water then was projected to increase by 5% annually and would provide for increased urbanization, industrialization and population increase.

Chan who retired in 1988 elaborated that the goal then, was to lay pipes “to the extremes of Ipoh. We had a lot of pipers then and we were very busy laying new pipes and where required replacing old ones”.

Besides funding the Greater Ipoh Project 2, ADB also funded two other projects at Kuala Kangsar region and Kerian and Larut Matang region. According to Chan, Perak was the only state that received the most ADB funding. As such ADB paid regular site visits to audit the progress of work being carried out. Subsequent funding for projects was funded by federal government loans.Empangan Sultan Azlan Shah

Sultan Azlan Shah Dam
The last component of the Greater Ipoh 2 Water Supply project was the construction of a dam across the Kinta River to increase the capacity of raw water resources from 136 mld (million litres per day) to 363 mld as well as providing for adequate reserve water during the dry seasons. It was also aimed at increasing the supply of water in the Kinta Valley to 639 million litres per day to meet the water demand until 2020.

Construction began in January 2003 and upon its completion in November 2006 was testimony to the ability of local contractors to undertake large and complex engineering projects. The project was officially opened in August 2007 and named the Sultan Azlan Shah Dam.

Towards Corporatisation
A condition for receiving ADB funding was that PWD’s water section had to operate independently as once all projects were completed “the waterworks department would be very big. Hence it had to organize itself to stand on its own two feet,” said Chan.

The Federal government agreed to allow JKR’s water section to be independent and in 1980 it was named Jabatan Bekalan Air Perak (JBA Perak) with Chan as its first Director. It was during his time that the current two blocks of 4-storey buildings were constructed as its headquarters with funds provided by the state government.

Jabatan Bekalan Air Perak
Dato’ Chan Kok Pew

The formation of JBA was just a transition. Another ADB condition was that the department should have a good foundation and be financially sound first before it could be turned into a Board.

Hence after 11 years, in 1991, JBA Perak was called Lembaga Air Perak or Perak Water Board. It was made up of a Board of Directors which according to Chan “included Dr Nawawi Mat Amin and YB Ong Kah Chuan ” among others. Chan, though retired, was requested to sit on the board and remained a member of the Board for 17 years before stepping down.

Human Resource an Asset
At its beginning the Board had considered its human resources as an asset and had initiated steps to reward those deserving, with special incentives. As such although bonuses are paid out to all employees, there are some who received additional rewards, based on merit, a policy that has seen consistent operational efficiency all round.

Restructuring
In May this year PWB handed over RM900 million worth of water assets to water asset management company PAAB or Pengurusan Aset Air Berhad as part of a restructuring exercise.

According to Dato’ Yusof, the assets transferred were commensurate with the debts owed by the state to the Federal Government. The assets will then be leased back to the State for a term of 45 years at a mutually agreed rate. Yusof added that this restructuring will ensure that there won’t be any increase in water tariffs and will allow the Board to focus on its operations and increasing the efficiency of its water supply system.

Non-Revenue Water (NRW)
According to Yusof a challenge for the Board is the reduction of Non Revenue Water which currently is averaging at 30.4%. (Non revenue water (NRW) is water that has been produced but is “lost” before it reaches the consumer. Losses can be through leaks, theft or possibly metering inaccuracies.)

Although the industry average for NRW is 36% Yusof is targeting to reduce the loss by 10% over the next three years. Reducing NRW will reduce the strain on the environment and will require the cooperation of the Board as well as the consumer.

For the record PWB annually allocates RM100 million for replacing and rehabilitating new pipes not just to reduce NRW but also to maintain the quality of water for consumers.

..Quality water for consumers

Overall the Perak Water Board in its transition to be a responsible independent operator has achieved the title of being “one of the best governmental agencies in the country” which is a testimony of the quality slogan “do it right the first time”.

2 thoughts on “Perak Water Board – Doing it right the first time

  1. LAP has a huge profit margin. You know why? They cut corners. They, quite sometime back laid huge pipes along in Taman Halaman Ampang Mewah (the shortcut leading to the North South highway). The road was fine and of medium quality and very satisfactory. The LAP came along, dug up the road, laid the pipes and patched up the road. They did a shoddy job patching up the road. They only patched the part where they dug up. Now the part they dug up and patched, is sinking. That is how they make good money at the expense of the people of Perak. I hope Dato’ Ir Mohd Yusof, PWB General Manager takes note of this. That is a cheap and dishonest way of making profits. “Do it right the first time”, pleez do not make me laugh.

  2. More than half (sometimes two thirds) of LAP’s annual profits are channeled to the state government. How much is left to replace old pipes that were laid during the British times? No wonder that NRW% is high. Yet despite this, LAP still managed to make huge profits every year.

    This brings to the question of why Perak’s water infrastructure was sold to PAAB. LAP’s second highest earner in Malaysia, after Penang. There is no problem at all repaying any loans taken, with sufficient funds left to replace old pipes to reduce NRW%. If 70% of the annual profits is used to repay loans, it would only 12-13 years to repay all.

    Of course, this would mean that the state government would have to find other sources of revenue instead of convenient relying on water earnings. This would be a good thing because the state government would have to be more cost-efficient and cost-conscious, forced to be more careful with the public’s money.

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