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Singapore to raise water tariffs as production, supply costs increase

Details on the way; Masagos says the nation is currently under-pricing water

Minister for the Environment and Water Resources Masagos Zulkifli being shown round the Tuas Desalination Plant that is still under construction.


THE Singapore government is looking to raise water tariffs as the cost of producing and supplying water rises.

This comes as the level of water in Linggiu reservoir in Johor remains low, and Singapore ramps up other sources of water supply through desalination and NEWater plants.

"Going forward we are seeing higher costs in producing the water," said Minister for the Environment and Water Resources Masagos Zulkifli on Tuesday. Water pipes now have to be dug deeper due to increasing urbanisation, and older transmission pipes and plants also have to be upgraded, he explained.

These, together with the need to ensure a sustainable supply of water even with weather that is less predictable than before, means "we have to price water right", he added.

Water in Singapore is currently under-priced, Mr Masagos said. "In countries around the world where water is not priced properly, the water ministry is not able to recoup the costs enough to build new assets to replace old assets and sometimes assets are left in disrepair. Even if they do have water, water cannot get to where it's needed."

Mr Masagos was speaking to reporters during a visit to the Tuas Desalination Plant that is still under construction. More details on the tariff hike, such as the quantum and when it will be implemented, will be announced by the ministry during the Budget debate later this month.

Singapore last raised water tariffs 17 years ago. Including a 30 per cent water conservation tax, water in Singapore currently costs S$1.52 per cubic metre for households consuming less than 40 cubic metres a month, and for non-domestic users.

Singapore prices water to reflect its long-run marginal cost, or the cost of producing the next drop of potable water, according to national water agency PUB.

The Republic expects to have up to 85 per cent of its water needs met by NEWater and desalination plants by 2060, up from the current 65 per cent. A 2003 study by the Institute of Southeast Asian studies found the production cost of desalinated water to be three times that of water imported from Malaysia; the institute does not have updated figures.

PUB on Tuesday also invited Keppel Infrastructure Holdings, Sembcorp Utilities, Tuas Power and YTL Power International to submit proposals for the desalination plant in Jurong Island.

The plant, which will be Singapore's fifth, will be built by 2020 under a design-build-own-operate (DBOO) arrangement. Like the S$217 million Tuas plant, it is expected to add 30 million imperial gallons (mgd) of desalinated water a day to the Republic's water supply.

The four companies were shortlisted from an earlier pre-qualification exercise. The desalination plant will be sited next to the existing facility of the successful applicant - either a power plant or steam generation plant - on Jurong Island.

The successful party will enter into a 25-year water purchase agreement to supply desalinated water to PUB.

Singapore already has two desalination plants in operation, with a combined capacity of 100 mgd, which can meet up to 25 per cent of the country's current water demand. The third desalination plant in Tuas is expected to be completed by November this year, and a fourth in Marina East by 2020.

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