Revenue from the Phnom Penh Water Supply Authority – the first listed company on the Cambodian stock exchange – will be cut 800 million riel ($200,000) per year as the company implements a concession plan to lower water prices.
The plan was passed after the government urged PPWSA to lower prices for those living in Phnom Penh by renting rooms or houses, mostly garment factory workers and university students.
Sim Sitha, director general of PPWSA, told the Post the plan will cover 4,356 house owners, equivalent to 90,478 rooms.
He added that under the scheme, water will be sold at 1,030 riel ($0.25) per cubic metre to house owners, giving them the right to sell water to tenants at 1,200 riel per ($0.30) cubic metre.
Before the plan, water was priced at 1,200 riel per cubic metre for house owners and 2,000 riel per cubic metre for the end user.
“We face revenue reduction of 800 million riel per year,” Sitha said. He added that all relevant partners, from the board of directors to investors’ representatives, had agreed the concession plan would not affect the company’s share price or performance.
“This is about helping society and letting workers and students living in rented houses or rooms spend less on water and save [money].”
Total sales of water for PPWSA, which services all of the capital’s water needs, reached more than $26.7 million during the first nine months of 2014.
According to the company’s latest filing to the Cambodian Stock Exchange (CSX), third-quarter results in 2014 registered a 128 per cent increase in profits year-on-year.
After tax, PPWSA profits topped $4.5 million during the three-month period.
As PPWSA is a state-owned enterprise, Lamun Soleil, deputy director of market operations at the CSX, said one of the company’s missions is to help the government reduce poverty by providing lower-priced water for low-income people.
At the same time, it charges higher prices to higher-income people to compensate for low prices.
“Shareholders of PPWSA should be aware of this social mission. By buying PPWSA’s shares, investors have tacitly accepted this mission already,” he said.
Svay Hay, chief executive officer of Acleda Securities, said that beside revenue, investors always consider a company’s cost efficiency, sustainability, and better dividend policy.
“PPWSA shall record an increase of clients and water usage, which may contribute to offset the concessional price,” he said.