ALOR SETAR, March 4 — The federal government has agreed to write off the Kedah rural water supply debt, amounting to RM699 million, after the signing of the state water services industry restructuring agreement, today.

Minister of Environment and Water Datuk Seri Tuan Ibrahim Tuan Man said the move would reduce the state’s water supply debt, from RM1.82 billion to RM1.12 billion, and the balance would be taken over by Pengurusan Aset Air Berhad (PAAB).

He said the agreement would enable critical rural water supply infrastructure projects, such as the upgrading the Lubuk Buntar Lama, Jenun Baru, Bukit Selambau and Sungai Limau water treatment plants (LRAs), to be implemented through grant financing to meet consumer demand.

"The balance of the loan will be transferred to PAAB, and the payments will be restructured for a period of 45 years through a lease to be charged to Syarikat Air Darul Aman Sdn Bhd (Sada).

"Sada will be given a moratorium on the lease payment for the first five years to help it build a strong financial base before starting repayment to PAAB,” he said in his speech at the agreement signing ceremony here today.

Tuan Ibrahim said PAAB would build water assets in Kedah based on the build-and-lease approach and subject to competitive rates, compared with commercial financing.

"Sada will be able to improve the efficiency and quality of water services to consumers with the construction of new LRAs, upgrading of existing LRAs and replacement of pipes and distribution systems.

Meanwhile, at a press conference after the signing ceremony, Tuan Ibrahim said the government also approved the LRA construction project in Kedah worth RM1 billion following the signing of the agreement.

"It involves the construction of an LRA in Sidam Kiri, Kuala Muda, costing RM450 million, which is expected to be completed in 2027, and another in Kodiang, Kubang Pasu, costing RM550 million, which has been approved and is in the final process for work to commence,” he said.

The signing ceremony was witnessed by Tuan Ibrahim and Kedah Mentri Besar Muhammad Sanusi Md Nor. — Bernama