THE Penang government will be required to pay RM210 million annually for 40 years, in addition to RM1.70 for every cubic metre of treated water purchased from Perak, under the long-negotiated Perak–Penang Water Project.
State Infrastructure, Transport and Digital Committee chairman Zairil Khir Johari said the RM210 million yearly payment constitutes the capacity charge, while the RM1.70 per cubic metre is the variable charge for the treated water supplied.
He explained that the Perak-appointed consortium must construct a completely new water treatment plant with a capacity of 500 million litres per day, along with pipelines, reservoirs, and supporting infrastructure dedicated solely to this project.
“It would have been a different scenario if Penang were purchasing treated water from an existing plant,” he said.
Zairil (PH–Tanjong Bunga) was responding to a question from Lee Khai Loon (PH–Machang Bubuk), who asked why Penang needed to commit to a 40-year payment scheme while still being charged RM1.70 per cubic metre for the water received.
He added that the Perak State Development Corporation–Gamuda consortium will finance and construct the entire infrastructure package.
“The 40-year payment structure covers construction and financing costs. Penang conducted its due diligence using Perbadanan Aset Air Berhad’s benchmarks.
“We found the pricing to be competitive, and the cost of acquiring treated water from Perak has been spread out over 40 years,” he said.
The Perak–Penang Water Project, first mooted in 2009, initially centred on Penang’s intention to purchase raw water.
Over time, negotiations shifted toward the supply of treated water instead. The project is now viewed as critical to strengthening Penang’s water security beyond 2030.
Responding earlier to an oral question from Abidin Ismail (PN–Sungai Bakap), Zairil said both state governments reached a basic agreement during a negotiation meeting on Oct 10, facilitating the signing of a memorandum of understanding (MoU) on Nov 6.
Under the MoU, Penang is expected to purchase at least 300 million litres of treated water per day beginning in 2031. Both states aim to finalise a bulk water supply agreement within six months, subject to the necessary approvals.
Zairil added that the Perak–Penang Water Project is a long-term strategic initiative designed to safeguard Penang’s water security, which continues to show positive development.
“The project is an essential blueprint to ensure the sustainability of Penang’s raw water supply until 2050.
“The extraction of water from Sungai Perak is a long-term measure to secure the continuity of raw water supplies for the state.
“It forms a strategic solution that will ensure Penang’s water security through to 2050,” he said.
Story by Riadz Akmal