Gamuda Bhd’s water infrastructure venture has secured a long-term revenue stream after its Perak joint venture signed a 40-year bulk water supply agreement with Penang, paving the way for recurring concession income and positioning the group to undertake an estimated RM5 billion of upstream water infrastructure works.
Yesterday, Khazanah Air Perak’s (KAP) wholly owned subsidiary, Prasaran Air dan Irigasi Perak Sdn Bhd, signed the Bulk Water Supply Agreement (BWSA) with Perbadanan Bekalan Air Pulau Pinang (PBAPP) on July 15.
KAP is a 50:50 joint venture between Gamuda and Perbadanan Kemajuan Negeri Perak (PKNPk).
The agreement forms part of the Northern Perak Water Supply Scheme (NPWSS), under which Gamuda was appointed by the Perak government in July 2025 to develop, operate and maintain water treatment and distribution infrastructure in northern Perak, while supplying treated water from excess raw water resources.
Under the NPWSS, 1,500 million litres per day (MLD) of raw water will be transferred from Sungai Perak to the Bukit Merah Dam. Of this, 500 MLD will be reserved for irrigation needs 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 supplied to Penang.
Operations under the BWSA are targeted to commence by March 31, 2032, subject to completion of the water treatment plant and raw water transfer infrastructure, as well as approvals from the National Water Services Commission.
PBAPP has committed to a minimum treated water offtake of 300 MLD, with the option to increase purchases to as much as 500 MLD.
CIMB Research estimates Gamuda’s 50% share of annual revenue from the concession could include approximately RM105 million in capacity charges alone, based on the minimum committed volume. Additional earnings will come from service charges of RM1.70 per cubic metre, which will be subject to a 11.8% escalation every three years, together with variation cost adjustments for chemicals and electricity.
The research house estimates the project will generate an equity internal rate of return (IRR) of around 10%.
Although CIMB has yet to incorporate earnings contributions from the BWSA into its financial forecasts pending the execution of a definitive agreement expected by Nov 30, 2026, it believes the deal significantly strengthens Gamuda’s long-term earnings visibility.
More importantly, the agreement enhances Gamuda’s prospects of securing the estimated RM5 billion construction package for the upstream components of the NPWSS.
CIMB Research maintained its “Buy” recommendation on Gamuda with an unchanged target price of RM6.00, citing the long-term concession income and additional construction opportunities arising from the project.
