Image source: Buletin Mutiara

Penang has taken a major step towards safeguarding its long-term growth with the signing of a conditional Bulk Water Supply Agreement (BWSA) with Prasarana Air dan Irigasi Perak Sdn Bhd (PAIP Perak) under the Perak-Penang Water Project (P-PWP).

The agreement will allow Penang to receive between 300 million and 500 million litres of treated water per day (MLD) from Perak over a 40-year period from 2032 to 2072, subject to regulatory approvals and shareholder endorsement.

The additional water supply is expected to play a crucial role in supporting Penang’s continued industrial expansion, new housing developments and growing population. Water demand in the state reached 865 MLD in 2025 and is projected to exceed 1,162 MLD by 2032, driven by ongoing investments in manufacturing, commercial activities and property projects.

Chief Minister Chow Kon Yeow described the agreement as Penang’s first major water agreement of the 21st century and the most significant since the commissioning of the Muda River Water Scheme in 1973. He said the project would provide Penang with a second major water source, strengthening the state’s long-term water security as it continues to attract investments and economic opportunities.

Under the project, PAIP Perak will develop, own and operate a new 500 MLD water treatment plant together with pumping stations, reservoirs and major pipelines in Perak. The dedicated infrastructure, estimated to cost RM8.4 billion, will be fully financed by PAIP Perak, meaning Penang Water Supply Corporation (PBAPP) will not be required to fund the capital expenditure or bear operational, maintenance, land acquisition or raw water costs.

Instead, PBAPP will pay an annual capacity charge and a treated water tariff under the agreement once supply begins in 2032.

The additional treated water will primarily support future growth in Seberang Perai Selatan (SPS) and Seberang Perai Tengah (SPT), where industrial activities, residential developments and commercial investments are expected to accelerate in the coming years. Sungai Muda will continue to serve as Penang’s primary raw water source.

Beyond meeting future demand, the project will also improve Penang’s resilience against climate change and prolonged dry spells by diversifying its water sources. As the state continues to position itself as one of Malaysia’s leading destinations for manufacturing, technology and property investment, securing a reliable long-term water supply is expected to provide greater confidence for businesses, developers and investors planning for the decades ahead.

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