Can the prices in the 1962 Water Agreement be revised?

What is the 1962 Water Agreement?

Under the 1962 Water Agreement, Singapore has the full and exclusive right to draw up to 250 million imperial gallons per day (mgd) of water from the Johor River at a price of 3 sen per thousand gallons.

In return, Johor is entitled to buy treated water up to 2 per cent of the total quantity of water we import to Singapore on any given day. In other words, Johor is entitled to buy up to about 5 mgd of treated water, provided that Singapore is able to draw its full entitlement of 250 mgd of water from the Johor River.

Under the 1962 Water Agreement, Johor is entitled to buy treated water at 50 sen per thousand gallons. Malaysia benefits from this pricing arrangement, as 50 sen per thousand gallons is only a fraction of the true cost to Singapore of treating the water.

At Malaysia’s request, Singapore has been supplying Johor with treated water in excess of Johor’s entitlement under the 1962 Water Agreement. This excess treated water is supplied at the same price as under the 1962 Water Agreement. This is done out of goodwill and without prejudice to our rights under the 1962 Water Agreement. Singapore has in fact been regularly supplying Johor with 16 mgd, and up to 22 mgd at times, of treated water.

Can the water prices in the Agreement be revised?

Both Singapore and Malaysia must comply fully with all the provisions of the 1962 Water Agreement, including the price of water stipulated in it. Any breach of the 1962 Water Agreement would call into question the Separation Agreement, which is the fundamental basis of Singapore’s very existence as an independent sovereign state. Neither Singapore nor Malaysia can unilaterally change the terms of this solemn agreement.

The 1962 Water Agreement provided for a price review after 25 years. Specifically, there was a right to review the price jointly in 1987. Malaysia, however, did not exercise this right in 1987. Since the right to review has lapsed, neither Singapore nor Malaysia can unilaterally change the price of water sold to Singapore.

In the event Malaysia chose not to review the water price in 1987, and on that basis, Singapore then took several actions which also benefitted Malaysia. This included building the Linggiu Dam at the cost of over S$300 million, which has increased the yield of the Johor River.

The terms of the 1962 Water Agreement were most recently reaffirmed between our two countries in January 2018 at the 8^th Singapore-Malaysia Leaders’ Retreat.

Do we have enough water to meet our needs?

Water is fundamental to our survival, and is a scarce and precious resource.

Recognising our water vulnerability, we have consciously and steadily developed two additional weather-resilient local sources (NEWater and desalinated water). Together with local catchments and imported water, they form our Four National Taps, and provide Singapore with robust and sustainable water supply.

The quantity of imported water is limited by the amount of water we can draw under the 1962 Water Agreement, i.e., up to 250 mgd.

Growth in our local catchments is limited, as two-thirds of our island is already water catchment area. This means that any additional water supply will have to be provided by NEWater or desalinated water. While NEWater and desalinated water are weather-resilient, they are costlier to produce. Water has to be priced to reflect the long-run marginal cost (LRMC) of producing and conveying our next drop of water, which is likely to come from NEWater and desalinated water.

Our water demand is increasing. By 2060, our water use is projected to about double from today’s 430 mgd. We must therefore plan ahead to find the needed water and invest in weather-resilient water sources. Today, we have three desalination plants. By 2020, we will have two more plants at Marina East and Jurong Island. This year, we started works on Phase Two of the Deep Tunnel Sewerage System (DTSS), which will enhance our used water management, and boost NEWater production when completed in 2025.

We will continue to build up our desalination and NEWater capacities. By 2060, these two sources will be able to meet up to 85 per cent of our water needs then.

Make every drop count

While PUB addresses the supply of water to cater for future demand, all of us have to better manage our usage patterns and learn to use water more wisely.

Our household water consumption has decreased from 148 litres per person per day in 2016 to 143 litres in 2017. Our water conservation efforts are showing results, but we must do better.

Do your part. Save water where you can. Make every drop count.

Learn more about the Water Agreements here:

• https://www.mfa.gov.sg/SINGAPORES-FOREIGN-POLICY/Key-Issues/Water-Agreements

• https://www.mfa.gov.sg/-/media/Images/MFA/Special-Events/Water/Water-Talks_-If-Only-It-Could.pdf (2003 Publication)

Sources: MFA and MSE

This article is accurate as of Jul 2018. For the latest updates, please visit www.mse.gov.sg, and www.mfa.gov.sg.