Penangites enjoy the lowest average domestic water tariffs in Malaysia for the first 35,000 litres consumed per month. In the past 22 years (since 1999), the increase in the average for the first 35,000 litres of domestic consumption per month is RM0.01. It was RM0.31 per 1,000 litres in 1999, and it is RM0.32 per 1,000 litres in 2021.

The maintenance of this low tariff is a “people-friendly” initiative. However, this initiative also comes with a “high cost” and some negative impacts:

  • A 2020 domestic water supply subsidy of RM95.35 million that was borne by PBAPP. Arguably, this large sum of money could have been better used to fund water supply projects for the future.

  • A 14.1% increase in per capita domestic consumption, from 255 LCD in 1999 to 299 LCD in 2020, exceeding the 2020 national average of 240 LCD.

  • Domestic water supply may be regarded as being “too cheap” to conserve: in 2020, the water bill for the average household in Penang is estimated to be about 5% – 10% of the electricity bill. This scenario undermines water conservation efforts because domestic water consumers are not “motivated” to save water. For the average Penang consumer, savings from using water wisely at home pale in comparison to savings from using electricity, petrol or mobile phone services wisely.

In terms of comparing trade tariffs in Malaysia, Penang’s average trade tariff of RM1.36 per 1,000 litres for the first 500,000 litres per month is also amongst the lowest in Malaysia, and it is 37.5% below the national average of RM1.87 per 1,000 litres in 2018.

PBAPP is presently awaiting Federal Government approval for a 2019 water tariff review application submitted by PBAPP to the National Water Services Commission (SPAN), at the behest of SPAN.

This tariff review application was drafted in accordance to SPAN’s Tariff Setting Mechanism (TSM) formula. It is subject to endorsement by SPAN and recommendation by Ministry of Environment and Water (KASA) for approval by the Malaysian Cabinet. As such, the Federal Government is the authority which will determine the timing and implementation of new water tariffs in Penang. Kindly note that PBAPP is not the only Malaysian water operator which was compelled to submit a water tariff review proposal to SPAN recently. SPAN has conducted public consultation exercises for other proposed water tariff reviews in Kelantan, Terengganu, Pahang, Selangor, FT Labuan, Kedah, Perak, Melaka, Negri Sembilan and Johor, in the period 2019 to 2021.

The primary objective for PBAPP’s tariff review application is to raise sufficient funds for its proposed water supply projects to mitigate Penang’s raw water risks and address its future water demand.