High OPEX increase to strain utility operations in APAC region


A new study conducted by Frost & Sullivan says the capital expenditure (capex) of water utilities in the Asia-Pacific region will grow by 9.7% in 2018.

Despite increases in capex, operational costs (OPEX) are expected to place additional strain on water utilities. The research company forecasts OPEX to grow by 3.2% in 2018 and to further increase in 2019.

Water scarcity and water pollution are the two major issues hugely negatively impacting on operations of utilities in Asia-Pacific.

Other factors including impacts of climate change on freshwater supply, rising energy costs and supply and demand management are some of the challenges expected to constrain utility operations.

For instance, Singapore is struggling to ensure water supply sustainability, of which the country needs to make sure it becomes self-reliant on alternative water sources including sea water desalination and wastewater reuse.

Policy challenges are expected to remain a barrier for utilities to advance their operations.

Australia is struggling with improving the efficiency of its water management. Policymakers are failing to break institutional barriers from fragmentation and enhance better national collaboration.

China’s greatest challenge is to reduce water pollution with stronger legislation.

However, technology advancement, rising operations cost and non-revenue water are likely to spur favorable and gradual regulatory support from 2023.

In addition, water utilities holding utility concessions will compete to innovate in technology adoption to gain competitive edge, reduce operations cost, and gain additional credentials for future PPPs and water projects.

The municipal water sector is expected to change, driven by efforts to improve revenue stream and OPEX.

The integration of smart infrastructure, smart technology and smart energy will result in smart water and wastewater networks.

Frost & Sullivan recommends countries with developed water infrastructure to adopt decentralised systems to diversity water sources and to reduce carbon footprint for emerging and poorer economies to build a network at the community level to ensure resilience in water supply.

“Water utilities need to innovate with the industry’s growth opportunities to remain resilient to challenging operational management,” reiterates Frost & Sullivan.