PENGURUSAN ASET AIR BERHAD SIMPOSIUM PENGURUSAN PENGAUDITAN INDUSTRI

PENGURUSAN ASET AIR BERHAD SIMPOSIUM PENGURUSAN & PENGAUDITAN INDUSTRI AIR 2009 PAAB’S ROLES & RESPONSIBILITIES IN DEVELOPING THE NATION WATER INDUSTRY Ir Abdul Kadir Mohd Din Chief Operating Officer 2 – 3 November 2009 Custodian of National Water Assets

Contents Background of Water Industry Separation of Roles & Resposibilities Product of Restructuring PAAB’s Roles & Challenges PAAB’s General Procurement Procedures Summary Custodian of National Water Assets 2

BACKGROUND OF WATER INDUSTRY Custodian of National Water Assets 3

Background of Water Industry STAGES OF DEVELOPMENT Division of Public Works Department Previous 2009 Todate • Perlis Waterworks Water Corporatized Privatized Department Board Bodies • Pahang • Perak • Terengganu • Penang • Negeri Sembilan • Kuching & Sibu (Sarawak) • Laku (Sarawak) • Selangor / KL • Labuan • Melaka • Kedah • Kelantan • Perlis • Pahang • Perak • Terengganu • Sarawak (except Kuching and Sibu • Sabah • Kuching & Sibu • Johor • Labuan (Sarawak) • Kelantan • Kedah • Johor • N. Sembilan • Melaka Sewerage Services was privatised nationwide in 1990’s except for Sabah, Sarawak, Kelantan & Johor Bharu Local Authority. Custodian of National Water Assets 4

Chronological Event of Water Industry Restructuring 1982 First Comprehensive Water Resources Study completed by JICA ( Demand up to 2000). 1987 First Water Supply privatisation to Taliworks Consortium for O&M of Semenyih WTP followed by corporatisation and privatisation of entire WS services state wide. 1990 -1992 Rising concerns for water supply situation and abortive attempt to establish a National Water Board. 1993 Sewerage Services Act (504) was passed by Parliament and mandated Sewerage Services Department to take role as regulator. 1994 Sewerage Services O&M privatised to Indah Water Konsortium Sdn Bhd (IWK). All assets transfer from local authorities to federal government except Sabah, Sarawak, Kelantan & Johor Bharu Local Authority. 1996 EPU set up the Sanitation Services Commission, National Water Council National Water Commission. 1998 National Water Resources Council was established. 1999 -2000 Task Force formed under Ministry of Housing & Local Government(MHLG) to establish National Water & Sanitation Commission. 2000 Draft framework of National Water Policy prepared by Ministry of Works. IWK wholly owned by Ministry of Finance Incorporated. Custodian of National Water Assets & 5

Chronological Event of Water Industry Restructuring (Cont’d) 2001 Two separate Control Commission established: 1. National Water Commission – Ministry of Works 2. National Sanitation Commission – Ministry of Housing & Local Government Second National water Resources Study completed (Demand from 2000 -2050). 2002 Ministry of Works commenced study on establishment of National Water Commission (KIV). 2003 National Water Resources Council decided to transfer responsibility of water from state to Federal Government and Draft Framework of National Water Policy was approved. 2004 Water Supply from Ministry of works and Department of Sewerage Services moved to new Ministry of Electricity, Water & Communication (MEWC. ) 2004 Water Supply from Ministry of works and Department of Sewerage Services moved to new MEWC and IWK was placed under same ministry. 2005 Federal Constitution of Malaysia was amended for joint responsibility of water services. Matters related to Water Supplies & Services transferred from state list to concurrent list. 2006 WSI Act (Act 655) and NWSC (Act 654) approved by Parliament and the King NWSC (SPAN) and WAMCO were established. 2007 NWSC Act enforced in January and WSIA Act was enforced in last quarter. 2008 Melaka & Negeri Sembilan migrated into new regime. PAAB to develop and implement Langat Water Supply Scheme in Selangor. 2009 Johor State migrated into new regime. Custodian of National Water Assets 6

SEPARATION OF ROLES & RESPONSIBILITIES Custodian of National Water Assets 7

Separation of Roles MINISTRY OF ENERGY, GREEN TECHNOLOGY AND WATER STATE GOVERNMENT Water Catchments • Policy making SPAN Regulator • Regulate • Licensing Lease Payments PAAB Water Asset Owner & Developer Lease Water Assets Raw Water • Regulate • Licensing WATER OPERATORS Operation & Maintenance Supply of Treated Water CONSUMERS Custodian of National Water Assets 8

Roles of Major Stakeholders Custodian of National Water Assets 9

PRODUCT OF RESTRUCTURING Custodian of National Water Assets 10

Product of Restructuring WATER OPERATOR - Non Dependent, asset light operator. - Full CAPEX funding. - Sustainable Business. - Short and Long Term Planning. STATES - Relief of financial burden. - Controlled on Resources. Malaysian Water Industry - Holistic, Sustainable, Transparent water industry - Regulated water industry. - Good governance. - More focus industry. - Owner of Water Operator. PAAB - Custodian of Water Asset. - Quality Asset - Total Asset Management - Project Management Custodian of National Water Assets CONSUMERS - Sufficient quantity and good quality water. - Efficient service. FEDERAL GOVERNMENT - Loan Recovery. - No future fund for water loan except for source work. 11

PAAB’S ROLES & CHALLENGES Custodian of National Water Assets 12

PAAB’s Roles & Challenges 1. Develop a “World Class Water Infrastructure” in Peninsular Malaysia and FT Labuan. 2. Source and obtain funding for the development of the nation’s water assets and lease such assets to water operators licensed by SPAN for operations and maintenance. 3. Assist the Government to restructure the nation’s water industry towards achieving the Government’s vision for efficient and quality water services. Custodian of National Water Assets 13

PAAB’s Roles (Cont’d) OPERATOR SPAN PAAB (Funding) (Procure) (Construct & Handover) • Poor Quality • CAPEX request too high • Standards Requested by other Agencies (DOE, MOH) Custodian of National Water Assets • Sufficiency of Funds • Selection of Quality Consultants & Contractors • Cost Overrun • Late Delivery 14

Future Challenges – Asset Coordination Dam Water Treatment Plant* Service Reservoir* Pump Stations* Total Pipeline (Km)* 5 23 856 137 1, 035 6, 608 5 6 124 37 174 4, 671 Johor 10 42 655 67 775 17, 802 Pahang Terengganu Kelantan Perlis Kedah Penang Perak 1 4 10 1 77 14 31 3 32 10 45 215 41 41 12 164 54 155 115 0 22 1 65 65 33 379 91 101 23 266 138 235 8, 961 7, 406 4, 726 1, 794 10, 594 3, 809 10, 404 Selangor 10 33 5 10 58 23, 502 WP Labuan 3 3 28 6 39 469 Total 55 319 2, 350 558 3, 282 100, 746 State /Assets Type Southern Eastern Northern Western Negeri Sembilan Melaka *Records are based on current survey (Oct 2009) and previous database Custodian of National Water Assets 15

Future Challenges – Increasing Water Demand Projected Domestic and Industrial Demand Year Demand (MLD) % Increase 2000 9, 655 - 2010 15, 285 6. 0 2020 20, 338 3. 3 2030 24, 485 3. 0 2040 28, 131 1. 5 2050 31, 628 1. 2 Custodian of National Water Assets 16

Future Challenges – Capital Investments Custodian of National Water Assets 17

PAAB’S GENERAL PROCUREMENT PROCEDURES & PROJECT ADMINISTRATION Custodian of National Water Assets 18

Tender Administration PAAB is a company wholly owned by the Minister of Finance Incorporated. All tender procedures are subjected to Government Procedures: • Adhering to Surat Pekeliling Perbendaharaan (SPP) and Arahan Perbendaharaan (AP). • Approval by PAAB’s Board of Director. • PAAB’s Procurement Manual “Generally all Works are under open tender” Custodian of National Water Assets 19

FLOW CHART Procurement Open Tender Flowchart Consultant Custodian of National Water Assets 20

Permohonan diterima 1 Mengkaji, menyemak dan memproses permohonan 2 LENGKAP 4 TIDAK LENGKAP 33 Mendapat maklumat tambahan Menyediakan perakuan senaraipendek firma perundingan untuk dikemukan kepada pihak berkuasa melulus Kelulusan senarai pendek firma perunding oleh pihak berkuasa melulus LULUS Mempelawa CTK kepada perunding oleh pihak 6 berkuasa melulus 5 PROSES SECARA CADANGAN TEKNIKAL DAN KEWANGAN (PERUNDING) 7 Menubuhkan JTKP 8 Penilaian cadangan teknikal 9 10 11 TIDAK SETUJU LULUS PERLU RUNDINGAN 12 13 TIDAK SETUJU Urusetia menyediakan perakuan untuk dikemukakan kepada pihak berkuasa melulus SETUJU Agensi keluarkan Surat Niat kepada perunding 15 Agensi keluarkan surat setujuterima kepada perunding 17 Bayaran LULUS TANPA RUNDINGAN Keputusan pihak berkuasa melulus Rundingan Teknikal dan Kewangan dengan Perunding 16 Custodian of National Water Assets Urusetia menyediakan perakuan perlantikan dan kos untuk dikemukakan kepada pihak berkuasa melulus 14 Keputusan oleh pihak berkuasa melulus Tandatangan Perjanjian Penilaian cadangan kewangan JTKP menyediakan laporan dan perakuan untuk dikemukan kepada urusetia TIDAK SETUJU 18 19 21

Permohonan diterima 1 Mengkaji, menyemak dan memproses permohonan 2 LENGKAP TIDAK SETUJU TIDAK LENGKAP 33 Mendapat maklumat tambahan 4 Menyediakan perakuan perlantikan perundingan dengan kaedah bayaran untuk dikemukakan kepada pihak berkuasa melulus 5 Keputusan perlantikan perundingann oleh pihak berkuasa melulus LULUS PERUNDINGAN LANTIKAN TERUS (PERUNDING) TIDAK SETUJU 6 Agensi mengeluarkan surat niat kepada perunding 7 Perunding mengemukakan cadangan teknikal dan kewangan 8 Agensi menubuhkan JKTP 9 JKTP mengadakan rundingan teknikal dan kewangan 10 JTKP menyediakan laporan dan perakuan untuk dikemukakan kepada urusetia 11 Urusetia menyediakan perakuan kelulusan kos untuk dikemukakan kepada pihak berkuasa melulus 12 Keputusan pihak berkuasa melulus LULUS Custodian of National Water Assets 13 Agensi keluarkan Surat Setujuterima kepada perunding 14 Tandatangan perjanjian 15 Bayaran 22

FLOW CHART Procurement Open Tender Flowchart Contractor Custodian of National Water Assets 23

1 Jabatan Teknikal 2 a 2 TIDAK PERLU PROSES KERJA TENDER TERBUKA BAGI KERJA PEROLEHAN (KONTRAKTOR) Tentukan jenis tender 4 Penyediaan document tender 5 Iklan tender 6 Penilaian teknikal dan kewangan 7 Penyediaan kertas taklimat tender 9 Pembentangan kertas taklimat tender kepada LPA Pertimbangan Kem. Kewangan jika nilai tender > RM 100 juta 13 10 Keputusan bersyarat Adakan rundingan dapatkan persetujuaan PERLU 3 Pertimbangan LPA jika nilai tender < RM 100 juta Keluarkan Surat Niat Agensi pastikan samada memerlukan perunding Perunding atau tidak 2 b 11 Keputusan tanpa syarat 12 17 Kemaskini kontrak / tandatangan kontrak 18 Pentadbir an 19 Bayaran 20 Custodian of National Water Assets Urusetia menyediakan perakuan perlantikan dan kos untuk dikemukakan kepada pihak berkuasa melulus 14 Keputusan tanpa syarat Keputusan bersyarat 15 16 Keluarkan Surat Niat Adakan rundingan dapatkan persetujuaan 24

NEW INNOVATION INTRODUCED IN PAAB’S TENDER AND PROJECT ADMINISTRATION 1) 2) 3) 4) 5) 6) Introduction of KPI, LOS, Penalty New Terms of Reference for Designers Standard Bills of Quantities Compilation of Records Introduction of New Technology Others a) Management of WTP Residual b) Establishment of Design and Research Centre c) Establishment of Education Training Centre Custodian of National Water Assets 25

New and Planned Innovation CONSULTANCY SERVICES 1. Introduction of: ● Key Performance Indicator ● Level Of Services ● Penalty Scheme ● Project Management Tools ● Work Methodology Custodian of National Water Assets 26

New and Planned Innovation (Cont’d) CONSULTANCY SERVICES 2. New Terms of Reference for Designers Water Industry • More comprehensive and mainly confine to Water Industry • Includes new area of services such as: q Risk Management and Crisis Management q Hazop and Hazrev q Asset Management and NRW Control System q Health Hazard & Security q Mentor-Mentee q Project Quality Plan Custodian of National Water Assets 27

New and Planned Innovation (Cont’d) CONSULTANCY SERVICES 3. Initiation on the Preparation of Standard Bills of Quantities for water Industry • Cooperation with Construction Industry Development Board (CIDB). • Memorandum of Agreement Signed on 3 July 2009. • Standard Method Measurement For Water Industry Custodian of National Water Assets 28

New and Planned Innovation (Cont’d) CONSULTANCY SERVICES 4. Compilation of Records • Total Asset Management System (WTPs, Reservoir, Pump house, Pipelines etc) • Land Status and Transfer Custodian of National Water Assets 29

New and Planned Innovation (Cont’d) CONSULTANCY SERVICES 5. Introduction of New Technology • Pilot Plant in Gemas q Static Mixer in Water Process q Streaming Current Meter / Detector (SCM/SCD) q Automatic Lime Use Custodian of National Water Assets 30

New and Planned Innovation (Cont’d) CONSULTANCY SERVICES 6. Others • Study of Management of WTP Residual in Malaysia • Initiatives on the Establishment of Water Academy in Malaysia (in Collaboration with Malaysian Water Academy) • Initiatives in the Establishment of Design and Research Centre • Initiatives on the Establishment of Education Training Centre Custodian of National Water Assets 31

SUMMARY PAAB adhered closely to the Mo. F Procurement procedures, Procurement Manual and GLC Red Book Compliance is towards good governance but not a hindrance to progress and expediency Introduction to quality services at all sectors and fields for development of good life cycle of assets Holistic approach with good transparency in execution In line with the vision of creating a Holistic, Transparent and sustainable Water Industry Custodian of National Water Assets 32

Sg Selangor Dam – SSP 3 Intake DAF Custodian of National Water Assets Sg Selangor WTP 33