How much is saved by water companies from the licence fee exemption?

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Water Companies to Save RM24 Million from Licence Fee Exemption

Water companies in Malaysia are set to benefit from significant cost savings through an annual licence fee exemption. This measure, implemented by the National Water Services Commission (SPAN), allows individual licence holders to receive an exemption of up to 30 per cent of their total revenue, collectively amounting to RM24 million in savings. This initiative is part of broader efforts by the Environment and Water Ministry to alleviate the financial pressures faced by water operators during the movement control order (MCO) period, thereby ensuring the continuity of water supply.
Licence Fee Exemption Details

The National Water Services Commission (SPAN) is providing a substantial exemption on annual licence fees for individual licence holders. This exemption can be as high as 30 per cent of a company's total revenue. This targeted relief aims to directly reduce the operational expenditure for these companies.
Financial Impact of the Exemption

The collective savings for the licence holders from this exemption are estimated to be RM24 million. While this provides financial relief to the water companies, it represents a corresponding revenue loss for SPAN. This financial adjustment is a direct response to the economic challenges impacting the water sector.
Broader Context of Financial Strain

The movement control order (MCO) has significantly impacted water companies financially. A notable factor is the reported 60 per cent decrease in demand for water from the industrial and commercial sectors. Concurrently, these companies are facing escalating operating costs, particularly for essential chemicals like chlorine and for electricity, which constitutes approximately 50 per cent of the cost to produce one cubic metre of clean water.
Additional Support Measures

Beyond the licence fee exemption, the Water Asset Management Company (PAAB) is also providing financial support by suspending water asset lease payments for three months, starting from April 2020. This suspension covers a total sum of RM100 million in payments. This measure is specifically applicable to lease agreements on state government water supply loans that PAAB took over during the restructuring of the country’s water services industry.

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How much is saved by water companies from the licence fee exemption?

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