Johor water disruption raises cost concerns for data centre operators

• He added that transient disruptions like the one recently experienced in Johor should not have a significant impact on DC operations in the short term.

KUALA LUMPUR (Nov 3): While water disruptions are not common in Johor, any recurrence of such incidents could raise the cost of doing business for data centre (DC) operators, who may need to strengthen their on-site water storage systems to ensure uninterrupted operations, an analyst said.

New Paradigm Securities head of research Ben Shane Lim said that while data centres (DCs) are designed with high levels of redundancy, repeated water supply interruptions could prompt operators to boost storage capacity and contingency measures.

“It will be a cost of doing business,” he told The Edge Malaysia. “Generally, data centres have a high level of built-in redundancy. They will have several days of water stored on-site. If these events become more frequent, DCs will simply increase their on-site storage requirements accordingly."

He added that transient disruptions like the one recently experienced in Johor should not have a significant impact on DC operations in the short term.

Johor has emerged as Southeast Asia’s fastest-growing data centre hub, projected to account for 60% of Malaysia’s total capacity by 2030, according to industry reports. There are currently 47 operational and planned data centres in the state, including those under construction or in various planning stages.

Water is a crucial utility for cooling systems in large-scale data centres, which can consume millions of litres per day depending on size and operational load. Any prolonged disruption to water supply could compromise cooling efficiency, potentially leading to higher operational costs if redundancy systems are insufficient.

The recent water disruption in Johor was triggered by pollution in Sungai Johor, which caused the temporary closure of four water treatment plants (WTPs)—Linggiu, Semangar and Sungai Johor, including one that is operated by the Public Utilities Board of Singapore—resulting in unscheduled supply disruptions across a few districts including Johor Bahru and Kota Tinggi, among others.

At the peak of the disruption on Friday, more than one million consumers were affected. As of 4pm on Monday, about 22,000 consumer accounts remained without water, even though all the treatment plants had resumed operations, a Ranhill Utilities Bhd (KL:RANHILL) spokesperson told The Edge Malaysia.

“We expect the recovery period to take at least 12 hours for water to be fully restored, hopefully by midnight,” the company’s spokesperson added. Ranhill's 80%-owned subsidiary Ranhill SAJ Sdn Bhd is the sole water operator for Johor, which is a joint venture with Syarikat Air Johor Sdn Bhd, a state-owned company. 

The incident was traced to a sand mining operation run by Hiap Aik Evergreen Sdn Bhd, after one of its six sand washing ponds burst due to soil movement. The collapsed embankment released muddy runoff into nearby waterways, severely contaminating Sungai Johor.

A Bernama report on Nov 1 cited that the river’s turbidity level spiked to 37,400 nephelometric turbidity units (NTU), far exceeding the normal level of around 400 NTU. The Johor Department of Environment (DoE) said the pollution was caused by the failure of a silt pond embankment, which allowed sediment-laden water to flow into the river.

In a statement on Nov 2, the DoE said it had issued a Field Citation (FC) — a form of enforcement notice — to Hiap Aik Evergreen requiring the company to submit a detailed report on remedial works and to conduct continuous monitoring of all its silt ponds to prevent a recurrence.

The department added that while the activity was not subject to a full Environmental Impact Assessment (EIA) — as it covered an area below 20ha — the Land and Mines Office (PTG) and National Water Services Commission (SPAN) have agreed that legal action will be taken under relevant licensing and water services laws.

Hiap Aik Evergreen, according to CTOS data, is involved in building construction, trading of building materials, and transportation services and is jointly owned by Tan Teck Guan and Tan Tsing Lien.

As Penang girds itself towards the last lap of its Penang2030 vision, check out how the residential segment is keeping pace in EdgeProp’s special report: PENANG Investing Towards 2030.