The Penang Municipal Council (MPPP) has defended the annual "overpayment" of RM3.8 million to seven solid waste contractors between July 2012 and June last year, as revealed in the 2013 Auditor-General's Report.

State executive councillor for local government, traffic management and flood mitigation Chow Kon Yeow described the overpayment as an "overestimation" of the tonnage of garbage collected daily as the amount has dropped due to the successful recycling efforts by the Penang government.

Under their contractual agreements, signed in 2007 and due to expire at the end of this year, the MPPP is required to pay the seven garbage collectors an annual lump sum of RM3.8 million for 1,100 tonnes of rubbish collected daily, Chow explained.

However, as a result of the state's recycling efforts, the tonnage had dropped to 650-670 tonnes daily in 2010, and today, the amount is just about 550 tonnes daily, despite the rapid development and rise in the state’s population, he added.

"The seven-year contracts were signed based on the assumption of 1,100 tonnes of rubbish daily, which can be wrong, as the assumption does not reflect reality," Chow said at a press conference to respond to the Auditor-General's Report.

"The weakness of the contract must be addressed. In the new contract, there will be real time statistics on the actual tonnage collected, as it will be weighed on a monthly basis when it ends up in the Pulau Burung landfill," he added.

In his report, the auditor-general pointed out that there is a shortfall in the actual garbage collected, compared with the state’s estimation as contained in the contract. This shortfall amounts to RM3.8 million in annual payment to the contractors.

Also present at the press event were MPPP secretary Ang Aing Thye and MPPP Councillor Ong Ah Teong.

Positive points shine through

The Auditor-General's Report on the council does reveal some positive points. It notes that the reduction in daily garbage is due to the state's recycling rate of 28-30 percent in 2013, which has exceeded the national target of 20 percent by 2020.

Chow praised the MPPP and the Seberang Perai Municipal Council (MPSP) for their efforts.

The auditor-general had also noted that the overall performance of the state's solid management was satisfactory.

However, Chow said the MPPP would rectify the weaknesses in the contracts with garbage collectors by allowing a variation in the costs to be paid, for example, every two years, to prevent the recurrence of "overpayment".

He noted that the auditing by the Auditor-General's Department was carried out in March and June last year, and that many improvements have taken place since then.

For example, in the landfills of Pulau Burung, a new temporary facility has been set up using reverse osmosis technology, where leachate water, as black as diesel became as clear as mineral water after being processed by the treatment plant - but, he added, it is not safe for drinking.

"We will continue with our recycling efforts and monitor our new contracts, ensure that our contractors can perform jobs efficiently, and effectively at the lowest possible costs. Indeed, strict monitoring by our council officers is required," he added.