Gamuda Bhd announced that its joint venture has secured a 40-year bulk water supply agreement with Perbadanan Bekalan Air Pulau Pinang Sdn Bhd to supply treated water from Perak to Penang.
The construction giant said Prasarana Air dan Irigasi Perak Sdn Bhd, a wholly owned subsidiary of Khazanah Air Perak Sdn Bhd (KAP), signed the Bulk Water Supply Agreement (BWSA) with PBAPP on July 15.
KAP is a 50:50 joint venture between Gamuda and Perbadanan Kemajuan Negeri Perak (PKNPk), established to develop and implement the NPWSS following the project’s appointment by the Perak state government in July 2025.
The agreement provides the commercial framework governing the long-term sale, supply and purchase of treated water from Northern Perak to Penang, with supply expected to commence by March 31, 2032, subject to the completion of infrastructure works and regulatory approvals.
Under the agreement, PAIP will supply a minimum of 300 million litres per day (MLD) of treated water, with capacity to increase to 500 MLD, which is the design capacity of the water treatment plant. Any supply above the minimum commitment will require mutual agreement and approval from the Perak state government.
The water will be supplied from a new treatment plant in Kerian, Northern Perak, to the Penang state border over a 40-year concession period ending in 2072.
Gamuda said the project forms part of a strategic initiative by the federal and Perak state governments to address long-standing water shortages for domestic, industrial and agricultural use in Northern Perak while creating a new long-term treated water source for Penang.
The NPWSS involves transferring 1,500 MLD of raw water from Sungai Perak to the Bukit Merah Dam. Of this, 500 MLD will be allocated to irrigation in Northern Perak, while the remaining 1,000 MLD will support domestic and industrial demand in Perak, including the Kerian Integrated Green Industrial Park, with surplus treated water sold to Penang.
The agreement establishes a pricing mechanism comprising capacity charges, supply charges and pass-through adjustments for chemical and electricity costs.
Capacity charges are expected to range between approximately RM1.1507 and RM1.9178 per cubic metre based on the minimum committed offtake, translating into annual revenue of about RM210 million.
Meanwhile, the initial supply charge has been fixed at RM1.70 per cubic metre and will be subject to an escalation of 11.75% every three years from the commencement of supply. The agreement also provides for capped annual pass-through adjustments of up to 4% for chemical and electricity cost increases, together with provisions covering extraordinary costs arising from changes in law or regulatory requirements.
