PBA to introduce new water tariffs for Penang

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KUALA LUMPUR: PBA Holdings Bhd (fundamental: 1.5; valuation: 1.8) announced that the Penang water tariff review announced last year will be implemented on April 1, which will see an average of 16.7% increase for domestic users, and an 18.8% hike for commercial users.

In a statement yesterday, the company said the review is in line with the Penang government and Perbadanan Bekalan Air Pulau Pinang’s (PBAPP) goal to reduce water consumption and avoid water rationing.

“We need Penang water consumers to develop the habit of saving water to avoid rationing in this age of climate change,” said the Penang water operator. It noted that water usage has increased to 298 litres per capita per day (l/c/d) over the January/February 2015 cycle, compared with the average consumption of 293 l/c/d in 2014. The usage is also higher than the national average of 210 l/c/d in 2013.

“In other words, Penang faces a risk of rationing during extended dry spells simply because per capita domestic water consumption is too high. We need to reduce consumption to 210 l/c/d or a reduction of the present consumption of 298 l/c/d by 30%,” said PBA.

Despite the hike, PBA said Penang’s average domestic and trade tariffs are still lower than the national average. For domestic consumers, the average tariff for the first 35,000 litres of water consumed per month will be 32 sen per 1,000 litres, the lowest in Malaysia and one-third of Johor’s average tariff of RM1.05 per 1,000 litres.

PBA rose 12 sen or 9% to close at RM1.41 yesterday, bringing its market capitalisation to RM427 million.

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This article first appeared in The Edge Financial Daily, on March 20, 2015.