PBA Holdings Bhd’s wholly owned subsidiary, Perbadanan Bekalan Air Pulau Pinang Sdn Bhd (PBAPP), has entered into a conditional build-operate-transfer (BOT) agreement with Inya Water Engineering (M) Sdn Bhd (INYA) for the development of a water treatment plant with a minimum capacity of 80 million litres per day (MLD).
Under the proposed transaction, INYA will design, finance, construct, commission, operate and maintain the water treatment plant (WTP), together with an associated raw water intake facility along Sungai Kerian and sludge treatment facilities.
PBAPP entered into the conditional BOT agreement with INYA on Aug 27, 2026, following an earlier letter of acceptance issued to INYA in November 2025. The original proposal was for a 50MLD plant, but PBAPP subsequently increased the required capacity to 80MLD in February 2026.
The WTP will be constructed on a 19,020-square-metre freehold site owned by INYA in Mukim 09, Seberang Perai Selatan, Penang. Completion, testing and commissioning are expected by June 7, 2027, subject to any approved extension of time.
INYA will also incorporate a special purpose vehicle (SPV), which will enter into a bulk water supply agreement with PBAPP.
Under the agreement, the SPV will supply a minimum of 80MLD of treated water to PBAPP for 30 years from the commercial operation date.
PBAPP will pay an initial bulk water supply rate of RM0.98 per cubic metre of treated water supplied and delivered at the designated delivery point.
The rate will be reviewed every five years, or at another interval approved by the National Water Services Commission (SPAN), with any increase capped at 10% of the prevailing rate for the preceding review period and subject to SPAN approval.
At the end of the 30-year contract period, ownership of the project assets — including the water treatment plant, related infrastructure, machinery, equipment, pipelines and the project land — will be transferred to PBAPP at no cost and free from liens and encumbrances.
PBAPP will also have an option to acquire the project assets during the contract period under certain circumstances, based on an agreed buy-out formula.
PBA Holdings said the proposed transaction is aimed at securing an additional and sustainable source of treated water for Penang while reducing the costs and risks associated with securing additional supply.
The project is particularly intended to support areas experiencing rising water demand in South Seberang Perai and Seberang Perai Tengah, including the Batu Kawan Industrial Park 3.
PBA Holdings said the project would help strengthen the resilience of Penang’s water supply system by diversifying PBAPP’s water sources, reducing reliance on Sungai Muda and mitigating potential medium-term water supply shortages.
