IN a historic milestone, the Penang Water Supply Corporation (PBAPP) has officially launched its landmark Islamic Medium-Term Notes (IMTN) programme, with a ceiling of RM5 billion, to finance critical water infrastructure initiatives under the state’s Water Contingency Plan 2030.
Chief Minister Chow Kon Yeow, who officiated the signing ceremony at the Marriott Hotel in Gurney Drive, hailed the sukuk programme as a “strong vote of confidence” from Malaysia’s leading financial institutions, namely Maybank and UOB.
“This marks only the second major financial milestone in PBAPP’s 26-year history since its corporatisation in 1999.
“Back then, the goal was to make PBAPP financially independent and self-sustaining. That ambition remains just as relevant today,” he said.
He recalled that the first major milestone was the listing of PBAPP’s parent company, PBA Holdings Bhd (PBAHB), on the Main Board of Bursa Malaysia in 2002, which raised RM62.3 million and funded key water development projects across Penang.
The IMTN programme is jointly advised by Maybank Investment Bank and UOB Malaysia.
Chow said this enables PBAPP to raise capital directly from institutional investors, based on its financial strength and track record as the state’s sole water operator.
“This sukuk initiative affirms PBAPP’s ability to secure funding based on its own merits.
“It has received the highest rating of ‘AAA/Stable’ from RAM Ratings and is fully endorsed by the Shariah Advisory Council of the Securities Commission, ensuring it is both financially and ethically sound,” he said.
However, Chow clarified that PBAPP would not issue the full RM5 billion immediately.
“The first issuance, scheduled for later this year, will be much smaller and project-specific. PBAPP will only raise what it can responsibly manage,” he said.
He added that the proceeds from the sukuk will primarily support water security projects under the Water Contingency Plan 2030, a strategic component of the Penang2030 vision to build a family-focused, green, and smart state.
Chow said that the sukuk offers Malaysians a new investment avenue beyond PBAHB shares, which have paid dividends for 24 consecutive years since listing.
“This programme gives the public another way to invest in PBAPP and reflects the company’s long-standing commitment to its investors,” he said.
In a related announcement, Chow said the Penang government will defer a planned water tariff adjustment to mid-2026, balancing fiscal needs with public welfare.
The delay is estimated to cost the state RM40 million.
Despite the cost, Chow and PBAPP reiterated their commitment to easing the financial burden on the public while continuing to invest in essential infrastructure.
“We are not sleeping on the job. Today’s ceremony marks an alternative funding avenue that enables investors to help fund necessary water projects and subsidise tariffs,” Chow said.
He stressed that PBAPP should not be judged solely on water tariffs.
“The corporation is actively working to improve efficiency, reduce operational costs, and implement critical upgrades, including booster pump stations and expanded distribution networks,” he stressed.
Acknowledging the limits of internal funding and cost control, Chow noted that PBAPP is collaborating with the Pengurusan Aset Air Berhad (PAAB) to fund large-scale infrastructure through a leaseback model.
Chow hoped the Mengkuang Water Treatment Plant would be financed through the sukuk initiative to cover the contractor payments.
He emphasised PBAPP’s role as Penang’s sole water operator with social obligations.
“Water is life. We take our responsibility to meet the people’s water needs seriously,” he said.
PBAPP chief executive officer Datuk K. Pathmanathan lauded the RM5 billion sukuk programme, adding that the proceeds would be fully utilised for key infrastructure water projects.
“This marks a transformative step to finance our water projects while opening a new avenue for investors seeking stable returns with positive environmental and social impact,” he said.
Pathmanathan was thankful to Maybank and UOB for partnering with PBAPP, valuing the strong working relationship.
Also present during the ceremony were Maybank Group chief executive officer Datuk John Chong, UOB Malaysia chief executive officer Ng Wei Wei, Maybank Investment Bank Group chief executive officer Michael Oh and UOB Wholesale Banking Area Head of North Area Centre Teoh Soon Beng.
Story by Edmund Lee
Pix by Adleena Rahayu Ahmad Radzi
Video by Law Suun Ting