IWK should raise sewerage tariff to stay afloat

Malaysia’s Auditor-General said national sewerage company Indah Water Konsortium Sdn Bhd (IWK), had suffered net losses over three consecutive years largely due to its low tariff - which has not been raised since 1994.

IWK accumulated losses of RM888.81mil between 2008 and 2010, which is also partly due to rising operational costs and loss of income due to various decisions by the Federal Government.

Based on its audited financial statements, the company’s revenue was eclipsed by its operational costs in 2008 (RM555.04mil revenue, RM596.34mil operational costs) and 2010 (RM607.14mil revenue, RM669.11mil operational costs).

The company saw its revenue top its operational expenditure in 2009 (RM713.30mil revenue, RM647.07mil operational costs) but still ended up with RM33.11mil in losses after tax that year.

The report pointed out that the company’s revenue took hits from the Government’s 2004 decision to lower the commercial sewerage tariff, and the 2008 implementation of the Water Services Industry Act 2006 which no longer required IWK to handle scheduled management of individual and communal septic tanks.

To ensure its rate is compatible with the current situation, the A-G said the Energy, Green Technology and Water Ministry, Finance Ministry and the National Water Services Commission should support IWK’s application to increase the country’s sewerage tariff.

In response, IWK said it had put forward a proposal to increase the sewerage tariff based on water usage to the ministries concerned and the National Water Services Commission through the Company Business Plan 2009.

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