The privatisation of the water supply system for Selangor and the Federal Territory could lead to water rate hikes in the future and this will leave the taps in poor homes dry, warned an activist today.

Coordinator of the Asia-Europe Water Justice Network Charles Santiago (right) said water supply should not be privatised by the government since access to water is a fundamental human right.

"The government has a constitutional responsibility to ensure even the poorest people have access to water but with this privatisation deal, they have reduced and handed over their responsibilities to a private company," Santiago told malaysiakini.

For instance, Santiago said the revenue collected by the government was required for maintenance of the water supply network while a privately-owned company would fix rates with a profit motive.

As a result of this, water may eventually be priced beyond what is affordable to the poor.

Lucrative deal

Santiago's comments were in response to the announcement last week by the Selangor government that it had awarded the contract to operate the state's water supply system to Selangor Water Supply company (Syabas).

The company is 70 percent owned by Puncak Niaga Holdings Bhd.

The contract is reportedly worth an estimated RM1 billion annually to Puncak Niaga, a company controlled by executive chairperson Rozali Ismail and his brother Mat Hairi.

As a part of the deal, the federal government will also be providing financial assistance of RM2.9 billion to Syabas to meet the company's working capital requirements, pay for new capital works and repay the state government's debt to three water treatment companies.

Water conservation

Meanwhile, the activist also raised objections over the sudden announcement of the privatisation deal without a proper account of the reasons behind it.

"There has been no public debate on the privatisation of our water resources. Access to water is a fundamental right - it cannot be privatised on the whims and fancies of the government," he said.

"When the state owns the process, this means that it still belongs to the community. But with the privatisation deal, our water supply is now owned by two individuals. Any problems that they have in their companies could in future be transferred to consumers," he added.

Santiago said that as it is, the announcement by the Selangor Water Management Board (Puas) that it would cut water supply to people who do not settle their bills on time is already in violation of fundamental rights.

"If people are careless about conservation of water, the remedy is to educate them and not to privatise its supply. At the moment, all it says is that those who consume has to pay more, there is element of conservation in it," he said.

He also expressed concern over the lack of incentive for water supply companies to deal with the problem of non-revenue water or water which is either lost through leakages or 'stolen' by non-paying consumers.

"As far as water supply companies are concerned, they are only required to supply a bulk amount. The distributor to the end consumer is Puas so they are the ones who have to deal with the non-revenue water. This is why Puas has huge losses."

Last month, Puas chief executive Mohd Sinon Mudzakir told reporters that the company was facing a deficit of up to RM400 million annually, and was in arrears of RM1.2 billion to suppliers.