08 March 2011

The Price of Water

Parliament was told on 5 March 2011 that the expiry of Singapore's 1961 Water Agreement with Malaysia on 31 August 2011 would not impact the country's water supply or water tariffs.

Will it impact Singapore's water supply?

Over the years, Singapore has developed, and continues to develop, alternative sources of water that are sufficient to replace water imported under the 1961 Water Agreement.

Will it impact Singapore's water tariff?

The 1961 Water Agreement (Tebrau and Scudai Rivers Water Agreement) gave Singapore the right to draw up to 80 million gallons per day (0.36 million cubic metres) of water for 50 years up to 2011.  Singapore pays 3 Malaysian sen per 1,000 gallons of water (0.30 cents per cubic metre in 2002).  Singapore also agreed to provide Johor with a daily supply of treated water up to 12 per cent of the raw water it drew, subject to a minimum of four million gallons (18,184 cubic metres), and at a price of 50 sen per 1,000 gallons (5.0 cents per cubic metre).

Treatment of the water to potable standards was said to cost RM2.40 per 1,000 gallons in 2002.  Singapore incurred a loss of RM1.93 per 1,000 gallons of water sold to Johor.

Assuming Johor bought the maximum quantity of water from Singapore under the agreement, the actual cost of raw water would have been 29.3 sen per 1,000 gallons (2.9 cents per cubic metre) consumed in Singapore, and the actual cost of treated water would have been RM2.69 per 1,000 gallons (27 cents per cubic metre ) consumed in Singapore.

Assuming Johor bought the minimum quantity of four million gallons per day and Singapore drew 80 million gallons per day, the actual cost of raw water would have been 13.2 sen per 1,000 gallons (1.3 cents per cubic metre) consumed in Singapore, and the actual cost of treated water would have been RM2.53 per 1,000 gallons (25 cents per cubic metre ) consumed in Singapore.

What were the prices of reclaimed water and recycled water?

The first year (2003) tender price of NEWater (ultra-clean reclaimed water) was 30 cents per cubic metre.  That was also the first year (2010) price of NEWater at PUB's newest plant.

The first year (2005) cost of desalinated water at Singapore's first desalination plant was 78 cents per cubic metre.  PUB will buy desalinated water from the country's second and larger desalination plant (a design, build, own and operate model) at 45 cents per cubic metre in the first year of operation (2013).

The cost of importing and treating raw water from Johor seems comparable to the current cost of reclaimed water and desalinated water.

Price of water sold to households

PUB sells potable water to households at $1.14 per cubic metre, plus 30 per cent water conservation tax and 7 per cent GST for the first 40 cubic metres of monthly consumption.  Consumption above 40 cubic metres per month is charged at $1.40 per cubic metre, plus 45 per cent water conservation tax and 7 per cent GST.  The tariff accrues to PUB while the conservation tax accrues to the Government.

Singapore's water demand is approximately 1.7 million cubic metres per day.

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Notes.

1.   PUB is Singapore's national water agency, and is responsible for the collection, production, distribution and reclamation of water in Singapore.

2.  Statement by Dr Yaacob Ibrahim, Minister for the Environment and Water Resources, Committee of Supply Debate, 4 March 2011.

3.  "Singapore-Malaysia Water Agreements" Singapore Infopedia National Library Board.

4.  Public Utilities Board annual report 2009/2010.

5.  "Sembcorp NEWater to start building Changi NEWater Plant in April" Public Utilities Board press release (28 Feb 2011).

6.  "PUB Selects Hyflux as the Preferred Bidder for the Second and Largest Desalination Plant in Singapore" Public Utilities Board press release (7 Mar 2011).

7.  Statement by Minister for Foreign Affairs S Jayakumar in Parliament, 25 Jan 2003.

8.  Cecilia Tortajada "Singapore: An Exemplary Case for Urban Water Management" 2006 Human Development Report.

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