“Once it’s approved, I will ask the federal government to defer the new tariff until the middle of next year,” he said at the launch of the Penang Water Supply Corporation’s (PBAPP) RM5 billion sukuk programme today.

Under federal water regulations, the National Water Services Commission requires a periodic review of tariffs by water operators. However, any actual increase still needs Cabinet approval and cooperation from state governments.

Meanwhile, PBAPP’s RM5 billion sukuk programme – the first of its kind by a state-linked water utility – aims to fund major infrastructure projects without overreliance on tariff hikes or bank loans.

The sukuk was issued under an Islamic medium-term notes programme backed by a newly established sustainable finance framework, which has received a “gold” rating from RAM Sustainability. The sukuk itself was awarded a top-tier AAA/Stable rating by RAM Ratings.

PBAPP chief financial officer Mary Ann Harris said joint principal advisers and lead arrangers Maybank and UOB were waiving arranger fees “in support of nation-building”.

Funds raised will support initiatives such as the RM2.1 billion Water Contingency Plan 2030.

Chow said PBAPP would also explore private financing and leaseback models to better manage costs over time.

“Whatever model we use, the bottom line is, we must repay. But if we’re efficient and generate more income, it becomes manageable,” he said.

He added that the first project to be funded through the sukuk would be the newly launched Mengkuang water treatment plant.

“Payment claims are already coming in, and we may begin disbursements from the first sukuk issuance soon.

“We’ve been discussing this sukuk programme for the past three years, and I’m glad we’re finally making it a reality,” he said.