Ranhill Utilities Berhad

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Ranhill Utilities Berhad

• BALANCING
• CONSUMERS CONCERNS
• WITH
• PRODUCERS CAPACITY

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Ranhill Utilities Berhad Group Structure
Ranhill Utilities Berhad (RUBhd)
Ranhill Water Technologies (RWT)
SAJ Holdings (SAJH)
Ranhill Water Services (RWS)

• Provision of technology driven solutions for
  water and wastewater treatment
• 4 BOT (15 - 29 years) wastewater and recycle
  water projects in Thailand and 2 water projects
  in China

• 30 years potable water supply concession for the
  entire Johor State
• Successful turnaround of SAJ Sdn Bhd from loss
  making to profitable business and improving
  service levels

• NRW management, networking modeling and
  geographical information system (GIS) service
• Provide operational services to water companies
  and agencies

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• BALANCING
• CONSUMERS CONCERNS
• WITH
• PRODUCERS CAPACITY

• Key Challenges for Producer in Water Industry
• Reform of Water Services Industry
• Consumers Concerns Efficiency Effectiveness

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Key Challenges for Producer in Water Industry
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Key Challenges for the Water Industry

• Efficiency and effectiveness
• Inefficient operations
• Ineffective structures
• Costs

• Funding
• Partial cost recovery
• No long term funding
• Unsustainable funding structure

Key Challenges

• Promote efficiency and effectiveness in the
  industry
• Derive a sustainable business model in long term
• Adequately address long term funding issue

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Risks Returns

• Tariffs below cost recovery levels (operating
  capital) limiting returns
• Systematic tariff increases supported by few
  govts.
• Investors recognise affordability/willingness to
  pay issue (1-2 household income)
• PSP not viable where large proportion of
  population on low incomes or smaller
  municipalities offering insufficient economies
  of scale.
• Lead times to investment returns risk of
  appropriation

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Water Supply Value Chain Improvements

• BULK WATER
• sourcing raw water
• processing
• Bulk water suppliers

DISTRIBUTION NETWORK
CUSTOMERS/ REVENUE/ FUNDING

• Need for adequate capacity
• Need to maintain plants, have bigger and/or new
  plants
• Payment arrangements re bulk water supplies
• Service standards esp. water supply availability
  and quality
• Operational efficiency and cost controls

• Need to maintain/replace existing meters and for
  new meters
• NRW issue
• Fair tariffs
• Assistance/grants
• Appropriate capex plans spending (to meet
  agreed/targeted standards)
• Use/need for loans/bonds to fund expenditure and
  bridge cash flows

• Need to maintain/replace existing pipes and for
  new pipes to inter alia extend network
• NRW/leakages issues
• Operational efficiency and costs controls

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Reform ofWater Services Industry
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The Water Bills Framework
SPAN

• SPAN CORP.COMPANY
• Regulator-regulated relationship
• Primary control via licensing regime
• Tariff escalation supervised, administered by
  SPAN
• PAAB CORP.COMPANY
• Owner-operator relationship
• Commercially driven, based on principles of
  fairness, equity and affordability
• Public support payments administered by SPAN via
  PAAB
• SPAN PAAB
• Regulator regulated relationship
• Primary control via capital budget funding
• Ensures continued investments in water/ sewerage
  infrastructure
• Removes public interest burden from commercial
  operators

Regulatory powers via licensing conditions
PAAB
Commercially driven contractual agreement
Corporated Company

• Asset light entity with pure operational focus
• Economic rent payable to PAAB for use of assets
• Limited funding needs
• Billing infra
• Working capital

• Need a framework that fulfils the following
• Congruence with Water Bills
• Commercially driven arrangement
• Regulatory risks mitigated

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Water Acts A Timely, Innovative Reform
Initiative
Medium term funding
The current predicament
15-20 years' maturity
Cash flow mismatch!
Long term assets
30-40 years of useful life
Govt better able to borrow long term at
favourable rates
A pragmatic solution
Long term funding
Better matching of asset liability tenure
Long term assets
IT IS VIEWED THAT THE REFORM INITIATIVES AS
POSITIVE, TIMELY STEP TOWARDS TRANSFORMING WATER
SERVICES INTO A SUSTAINABLE INDUSTRY
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Which, Will Help All Stakeholders

• Gradual, as opposed to steep increases in tariff
  levels
• Investments in water assets, quality continues
• Reduction in non-water revenue lessens pressure
  on tariff further

Public

• Pure operational focus ? primary objective to
  improve operational efficiency
• Burden of capital investments and funding the
  same removed
• Ability to distribute earnings better ? no need
  to conserve cash for heavy capital investments,
  meet funding obligations
• Attractive business model ? financially
  sustainable

Operators

• Central planning of investments ? better resource
  allocation/ management
• Investment plans independent of private sectors'
  ability to raise funding
• Lower cost of funds, and hence overall investment
  costs
• Able to moderate increases in tariff

Regulator/ Govt
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Consumers ConcernsEfficiency Effectiveness
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Consumers Concerns

• Quality Services
• Water Quality meeting guidelines
• Adequate Quantity continuous supply, good
  pressure, minimal interruption.
• Satisfactory Customer services efficient
  billing, fast respond to complaint.
• Minimal Cost
• Low Tariff

EFFICIENCY EFFECTIVENESS
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Framework to Ensure Quality Services

• A FRAMEWORK to ensure Quality Services, consist
  of
• Setting-up TARGETS based on the needs of
• Regulatory Requirements
• Stakeholders Expectations
• Benchmarking
• Managing Performance of Initiatives to meets the
  TARGETS

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Quality Services Companys Targets Quality
Objective
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Quality Services Companys Targets Customer
Charter
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Quality Services MANAGING PERFORMANCE
Managing Performance developed measurement
procedures to meet standards of excellence, and
ensuring that performance are measured to
determine achievement and areas for improvement
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Quality Services Managing Performance Ensure
Accountability

• What gets measured, gets done
• We have developed a number of programs and
  measurement procedures to meet our standards of
  excellence
• Company-conducted audits ISO 90012000 Internal
  Audit
• Health and safety Occupational Safety and
  Health Act (OSHA) compliance
• Targets Setting Companys Balanced Scorecard,
  Customer Charter Compliance and Quality
  Objectives Compliance
• Personnel performance Total Performance
  Appraisal Management
• Risk Assessment Risk Management Audit.

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Quality Services Managing Performance
Importance of Quality Data

• Water Utilities Operations Rely on Data.
• Quality data are needed to ensure analysis on
  achievement/ performance are done accurately and
  relevant with current needs to determine areas
  for improvement.
• Information and Communication Technology (ICT)
  applications help to capture, store, organize and
  control these data for analysis and monitoring in
  a more systematic and efficient ways.
• Heavy investment in ICT applications to support
  integrated operational management.

• Sample of ICT application across a water utility
  company
• Billing System
• Financial System
• Job Management System (JMS)
• Supervisory Control Data Acquisition (SCADA)
• Telemetry System
• Geographical Information System (GIS)
• Hydraulic Modeling
• Human Resource and Payroll
• Risk Management System

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Quality Services INITIATIVES
Appropriate Initiatives Enablers should be in
place to achieve the Companys Targets.
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Quality Services Initiatives Establishing
Positive Working Culture
The key to Business Turnaround is Establishing
Positive Working Culture with Strong Customer
Focus.
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Quality Services Initiatives Customer Call
Center
Open 24 hours, 7 days week TOLL FREE-LINE
1-800-88-7474

• Nerve center to receive feedback and complaints
  from consumers  
• Database on customers calls provides information
  for evaluation, planning, decision making, and
  managements actions.     
• The center currently receives more than 300 calls
  per day and through the Job Management System
  (JMS), creates jobs and track its status.

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Quality Services Initiatives MESRA PELANGGAN
Outreach Program

• Promote better rapport with consumers and improve
  customers service and getting feedback
• As part of effort in developing Consumers
  awareness in water conservation
• Visited Community Leaders covering all
  parliamentary constituencies

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Quality Services Major Initiatives
INITIATIVES
ACHIEVEMENTS

• Drinking Water Quality gt98 Compliance (Ministry
  of Health Standards)
• Country highest reduction of NRW from above 45
  to 29.9 (Sept 2006)

• Establishment of Central Lab - accredited with
  ISO/IEC 17025 certification by Department of
  Standard Malaysia
• Coverage of 50 parameters of physical, chemical
  microbiological test.
• Increase of Sampling points 35,000 samples per
  year, 300,000 water tests per year and
• 1st Tank Cleaning Program in Malaysia
• Established NRW Policy for company-wide practice.

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Quality Services Major Initiatives
INITIATIVES
ACHIEVEMENTS

• Improve Customer Service through Central
  Management, 24 hrs Customer Call Center and
  Customer Care Program
• Improve standards of excellence through programs
  and measurement such as
• Company-conducted ISO90012000 Internal Audit
• Occupational Safety and Health Act compliance
• Companys Balanced Scorecard, Customer Charter,
  Quality Objectives, Total Performance Appraisal
  Management
• Risk Management Audit
• Better data control monitoring through ICT
  applications in Billing, Financial, Human
  Resource, Job Management and Integrated
  Geographical Information System.

• Won Malaysian Water Association award for Best
  Management 2002
• SAJHs Organisational Climate Project was deem
  Best Workplace Practices by the Asian Forum on
  Corporate Social Responsibility 2005.
• Successful turnaround from loss to profitable
  business and improving service levels.

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THANK YOU