Sime Darby Could (Or Should) Become A Water Utility Too

By Syed Akbar Ali

Sime Darby Berhad is seriously pondering a new line of business – extracting ground water for public consumption. Sime has discovered vast amounts of groundwater under plantation land it owns in Batang Padang, Perak. The company has since spent a lot of money (many many millions of Ringgit) to study and undertake basic development work like drilling test wells and aerial surveys to develop the groundwater resources.

Groundwater means exactly that : water under the ground. The earth stores plenty of water underground (meaning it is actually non depleting). That is why wells work too. Springs (mata air) and even waterfalls from high up in the hills are often outlets for groundwater finding a way out. Groundwater is captured when the rain disappears into the ground to be stopped within certain geological structures.

My recent trip to South Korea (along with 20 other journalists, Consumer Association folk, Bloggers and Government folks) was actually a study tour arranged by Sime to introduce to us the industry there : groundwater, its extraction, Government / private sector collaboration and so on.

We visited groundwater extraction sites along the Han River in Seoul, on Jeju Island which lies about 50 miles off the southern tip of Korea and also in the City of Changwon near Pusan, also near the southern tip of the Korean Peninsula.

First some numbers

In Malaysia we consume about 15000 MLDs of treated water per day. MLD means million litres per day. Since 1 cubic centimetre (1 cc) of water weighs 1 gram, 1 litre or 1000 cc weighs 1 kilograms or 1 kg.

I cubic metre of water = (100cm x 100cm x 100cm) = 1,000,000 cc = 1,000,000 gms = 1000 kg = 1 metric tonne.

So 1 cubic metre of water weighs 1 metric tonne or just 1 tonne lah. 1 MLD works out to 1000 tonnes.

It is expected that by 2010 there will be about 30 million Malaysians consuming 17000 MLD of water per day.

98% of water supply in Malaysia presently comes from “surface water extraction.” This means taking water from rivers and dams (also rivers actually).

.

Batang Padang Groundwater Resources.

The Batang Padang area covers an area of about 2700 sq km. The district has annual rainfall of up to 3300mm. The area is sparsely populated and consists of forest, undeveloped land and plantations. Surveys and test wells indicate substantial amounts of “naturally replenishing” groundwater in Batang Padang. Test wells exceed 0.7 MLDs of water a day with one gusher producing 5.5 MLDs a day.

Sime targets to supply 500 MLDs of water to Selangor by Jan 1^st 2013. The project cost will run into ten figures. Why Selangor? Because there is an acute shortage of fresh water extraction sites in Selangor, which also has the highest consumption of water in the country.

What many Malaysians do not realise is that groundwater is already being extracted by many people here. Many factories have been extracting groundwater for industrial use for a long time. A steel mill in the Banting area is known to extract up to 80MLD per day without any monitoring. Contractors are easily available who can put a tube well in your house for about RM1800 to extract groundwater. The pump will cost about RM1000 more.

Kota Bharu in Kelantan gets all its water from underground – despite the beautiful Sungai Kelantan running right through the town. Arau in Perlis has also been extracting groundwater for a long time. So there has been extraction of groundwater in Malaysia for a long time. Its nothing new.

Radial Collector Well Technology

To extract groundwater the Koreans have developed some novel technologies. The idea is simple. Where there is groundwater you simply put a tube down, the water flows into the well and you pump it up. The groundwater is relatively clean and very clear. With minimal treatment (sand filter and activated carbon only) the water is actually drinkable (assuming there are no chemical pollutants in the neighborhood lah). Also the wells are nondescript and environmentally friendly. You dont even notice them. You can see the pictures to get an idea.

The other more interesting method is called a radial collector well. Radial simply means like the spokes of a sports car wheel. First they sink a well – either at a grounwater site or beside a river. If it is beside a river, some geology and hydrology is required – the river must be of sufficient size and the ground under the river should be preferably sandy or of loose rock formation. Solid rock or heavy clays may impair the movement of underground water.

At the bottom of the well they drill horizontal holes (radial spokes) that spread out and go under the river bed. One radial well we saw by the Han River went down 40 meters (120 feet) – way below the river bed and its five radial collectors reached out 25 meters (75 feet). There was a gap of about 100 meters from the tips of the collectors to the river bed – meaning the water had to filter through 100 meters of natural sand, rock and clay before it poured into the collectors. The resulting water was clean.

You can see in the picture a vertical well dug close to a river. The water from below the river bed filters thru natural soil, sand and rock and pours into the well. This picture does not show the radial spokes coming out of the well bottom.

In this picture above you can see water pouring into the well bottom thru the radial collectors.

Here is a view of the top of a radial collector well. It is covered with a concrete slab and has a few inspection manholes. It is quite nondescript and environmentally friendly. The wells do not take up much space at all. Vegetaion and plants grow well around the extraction points - meaning there is no subsidence of the water table (or of saline intrusion at this inland site).

This pretty lass is Cik Masami - a reporter from the Malay Mail - is climbing thru one of the manholes into the collector well. No dams, reservoirs or cutting too many trees.

In the traditional ‘surface water extraction’ method you either build a dam or you pump river water directly into the water treatment plant. There the water is physically cleaned of debris, passes through expensive membranes and is then treated with alums and chemicals to make Class 1 drinking water. (I was a Director of a company which was given a concession to build a 225 MLD water treatment facility up in Kedah. Before that, as a Banker, I also financed the Semenyih water treatment facility).

But in this radial collector well method you dont mess with the river too much. The environmentalists should be much happier with the radial collector wells rather than building huge dams and reservoirs.

The radial collector well still needs tanks and treatment but it is much smaller and can be sufficiently removed from the extraction site. No need to cut down too many trees.

The Koreans say that the cost of production per cubic metre of treated water is slightly cheaper through the radial collector well method. Slightly only because although the usage of chemicals and membranes is minimised, they need more electricity to run each individual pump. Every well needs its own pump, which also needs maintenance. So what you gain here you may lose there, but to me the greatest advantage of this radial well collector method is that it is nondescript, it is environmentally more friendly and it needs no dams and reservoirs.

Malaysian Water Politics

If Sime can develop this business well, it will obviously open the way for the company to become a Water Utility too. I see this as a natural evolution for Sime. The company is a homegrown conglomerate which is not only a plantation giant but also a major infrastructure player.

Also it is not likely that Sime will attract the type of negative attention it received over the ill conceived IJN acquisition (which was aborted). The IJN acquisition was roundly criticised because Sime was asked to take over a Government institution built with taxpayers money which served mostly Civil Servants using taxpayers money again.

In contrast, ground water extraction on a large scale is a greenfield project which has never been done before in Malaysia. This is creating new wealth. Sime should be able to pull it off. And Sime can also exploit the radial collector well technology to extract water from under rivers – as per the diagram earlier. There is great potential in this because all the numerous rivers that we have in this country are potential sites for radial collector wells. This is a completely new industry. Sime Darby could or should become a water utility.

But there are other privatised water players who are not too comfortable with Sime’s venture.

Quite obviously in an economy where ‘who you know’ is more important than ‘what you know’ prominent members of the “community of corporate chickens” (more on this in my next post) have to keep looking over their shoulders. If they dont do this often enough, they may lose their heads – the inevitable fate of too many chickens.

The talk around the table was that some folks were kicking up dust over Sime’s groundwater project in Batang Padang. Three major complaints have been put out :

i. ground water extraction will cause subsidence of surrounding soil

ii. Salt water intrusion from the sea will cause groundwater salinity

iii. the impact of ground water extraction on plant growth and the environment (including drop in the water table).

Soil subsidence is dependent on the geology. Large clay deposits in ground water areas have more subsidence risk but again it depends on the geology. None of the sites we saw in Korea suffered soil subsidence.

What can be affected is the height of the water table. An example was quoted of a drop in the local water table by about 1 metre over a 1 sq km area after prolonged years of extraction.

As for saline intrusion, on Jeju Island in Korea one ground water well is located on the beach – 30 metres away from the waves and produces fresh water. Yet on the other side of the island, there is saline intrusion eight kilometres inland. So saline intrusion is more prone along the coast or on islands. But it is entirely dependent on geology.

Batang Padang is tens of kilometres away from the Straits of Melaka so it is not likely that there will be saline intrusion. Also Sime’s land is up in the hills.

There was no negative impact on any plant growth around any of the radial collector wells that we saw. You can see in the pictures that there is rich vegetation around the radial collector wells.

Water Shortages On The Horizon

A Senior Government water engineer says that not only Sime’s groundwater project must take off but we must really push for the accelerated development of our water resources. Here are some dates he mentioned:

By 2010 Penang is going to face serious water shortages, unless the Mengkuang Dam is completed on time.

By 2012 Selangor is going to face water shortages too. By 2015 there will be nationwide water shortages. By 2020 there will certainly be large water shortages throughout the country. Unless we develop our water supplies on an accelerated basis.

And these projections do not take into account for any major disruptions or shocks. For example if a couple of large steel mills, copper mills or other huge industrial plants start up, this equation will not hold anymore.

So I hope that Sime will get on with this job fast enough. The Senior Government engineer said that at present the Government is being bullied by the privatised water entities. We have all read in the recent Auditor General’s Report how privatised operators have not been cleaning the water reservoirs over the years. That is one of the reasons why we have such poor quality water.

Then they ask the Government for this and that, just to do what they were obliged to do in the first place. Competition is always good. With the entry of Sime into the equation, it will be good to foster more discipline and commitment among the corporate chickens.

The Hydrologist

To do anything, it is crucial to have the right people in place. In the picture here (freezing our behinds at zero degree temperatures by the Han River in Seoul) I am standing beside Dr Azuhan Mohamed, PhD who is a hydrologist by training. He is Head of Water Management at Sime Darby and has long experience with the Government in water hydrology. Throughout the five days in Korea I really enjoyed picking his brain on the technical apsects of ground water extraction.

Click on the picture to see chattering teeth. It was cold.

At all the presentations by the Korean engineers, Dr Azuhan frequently chipped in to answer questions. The engineers seem to enjoy a camaraderie and mutual respect. It was a continuous chorus of acquifers, radial collectors, MLDs, water tables and stuff throughout the five days. Exciting betul.

But we have the trained manpower and the corporate skills to develop our ground water resources in a systematic and organized method to serve the community and also to yield a profit for Sime Darby. Semua boleh bikin. Just do it step by step.

Sime Darby’s Open And Transparent Manner

Sime is being very frank, open and transparent about this groundwater extraction project. I think after they got roasted over the coals over the IJN fiasco, Sime has wisened up some. If you are doing something good, then let people see what you are up to lah. Its a lot smarter than sneaking around and then getting caught with your pants down.

Government Involvement in Development of Ground Water resources

In Korea which has only about 1600mm of annual rainfall, the Goverment funds research and development in ground water development. They also spend money developing basic infrastructure to get the groundwater. Then the commercial operators are given concessions to exploit the ground water resources which have been identified (and even developed) by the Government.

There is no such thing in Malaysia which has up to 3600 mm annual rainfall – twice the Korean rainfall. Groundwater has never been a priority in Malaysia so there is not much hydrological survey and mapping of our groundwater resources.

So Sime is not only a pioneer but the company will have to pay for the A to Z of finding, developing and doing the research on ground water.

As Samy Velu used to say in the old days ‘Jabatan-jabatan Kerajaan yang berkenaan dalam Taanaa Aaayer kita yang tercinta ini akan memberi sokongan pun-nuh daripada belakang’. Meaning the Government will support from behind but Sime will have to do all the work.

I think Sime deserves some concessions from the Goverment on this one. Give them some credit lah – make things a little easier.

But from the consumer's point of view here is what I want:

First we want clean drinkable water from our taps. Can we do away with the huge cappucino machine type water filters that are becoming so neccessary in every urban home? And then the little water filter by the kitchen sink too. And the water is still dirty. So Tun Musa, the first order of the day is clean water.

Then we want it in sufficient quantity too and with reliability of supply – meaning no interruptions in supply. We want water everyday and at the same good quality.

Finally we dont want to pay too high tariffs for water to finance any corporate jets, corporate helicopters and so on that Sime may be tempted to buy from their new found water revenues.

I say this because I used to work in the Menara Haw Par which is located close to where one privatised water tycoon had his offices. Twice a day his sky blue helicopter would come by, bringing its precious cargo of CCC (community of “corporate chickens” – read my next post) to and from work. After the 1997 Financial Crisis the helicopter disappeared.

If there are excess profits, I hope Sime will plough back substantial portions into their groundwater operations to improve service to the consumer.