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July 11th, 2018
Via Asia Times, a report on recent Malaysian comments that say a decades-old, fixed rate supply contract is ‘too costly’ and ‘ridiculous’ while the rich city-state maintains that a deal is a deal:
In resource-scarce Singapore, water is sacrosanct. Water security has long been a perennial concern for the otherwise rich city-state, which for decades has relied on water imports from neighboring Malaysia to meet demand.
Now, a contentious dispute over those contractual water sales that previously stoked bilateral tensions has resurfaced under newly elected Malaysian Prime Minister Mahathir Mohamad, who recently described the decades-old deal as “too costly” and “manifestly ridiculous.”
The legally binding agreement was guaranteed by both governments and registered with the United Nations when Singapore separated from Malaysia to become an independent state in 1965. The deal is not due to expire until 2061.
Malaysia sought a price revision during Mahathir’s previous term as premier, a dispute that severely strained ties in the early 2000’s, but talks stalled and were ultimately abandoned.
Mahathir’s unlikely comeback at Malaysia’s May 9 elections stirred anxieties in Singapore over concerns that the nonagenarian premier would revive thorny disputes and resume his trademark “combative” approach to foreign policy, fears that are now partly coming to pass.
Mahathir’s calls to renegotiate the water pact follow an announcement in May to “postpone” a multi-billion dollar high-speed rail project linking Singapore and Kuala Lumpur. That move was framed by Malaysian officials as a cost-cutting measure to contain its estimated 1 trillion ringgit (US$248 billion) national debt.
Singapore, whose firm stance on the deal has previously been derided as “legalistic” by Malaysia, has reiterated that both sides are obligated to adhere to the 1962 agreement. In that deal, the city-state must sell a small portion of water it treats back to Malaysia, which the southern Johor state purchases at a preferential, lower-than-market rate.
Johor’s new Chief Minister Osman Sapian, a member of Mahathir’s newly-elected Parti Pribumi Bersatu Malaysia (PPBM), recently echoed the premier’s calls for a price revision, suggesting the price be raised over 16 times its current rate to 0.50 sen per thousand gallons, equivalent to the price in which water from Johor is sold to Malaysia’s coastal state of Melaka.
Singapore has given strong indications that it is unwilling to entertain a price revision, maintaining that neither country can unilaterally alter the terms of the 1962 agreement. Singapore’s Foreign Minister Vivian Balakrishnan this week even likened attempts to revise the deal as questioning Singapore’s “very existence as an independent sovereign state.”
While Malaysia has yet to clarify its official position on the matter, the revival of contentious issues that characterized Mahathir’s earlier premiership may suggest a return to an era of “confrontational diplomacy and barbed rhetoric,” a description coined by recently-ousted premier Najib Razak, who deepened ties with the city-state.
That scenario could complicate other Najib-era bilateral projects, including joint residential development projects in Singapore between the sovereign wealth funds of both countries, a prospect that would likely upset investors and markets. Others believe the stance of Malaysian officials has more to do with domestic politics.
“The new government needs to demonstrate their ability and willingness to resolve the country’s debt issue while distancing themselves from Najib’s legacy as prime minister,” says Rashaad Ali, an analyst at the S Rajaratnam School of International Studies (RSIS) in Singapore. “At the end of the day, both parties benefit from the existing deal.”Singapore’s dependence on water imported from Malaysia is a strategic vulnerability which the city-state is attempting to offset through massive investments in water treatment infrastructure, research and development of new technologies and water recycling processes that would enable greater water self-sufficiency.
Leading those efforts is the Public Utilities Board (PUB), Singapore’s national water agency, which is widely regarded as being among the world’s most advanced water utilities. The wealthy city-state’s 5.7 million population currently uses an estimated 430 million gallons a day, supplied by sources known as Singapore’s “four national taps.”
Natural sources include rainwater which falls into local catchments and drains that empty into reservoirs, which can meet about 10% of supply needs, as well as imported water from Malaysia, which supplies up to 60% of demand. Singapore has also become the world leader in producing high-grade potable water reclaimed from sewerage systems.
Supplies of reclaimed water, known as NEWater, are purified through energy-intensive micro-filtration, reverse osmosis and ultraviolet disinfection processes that have been in use since 2003 to meet up to 40% of current needs. Desalination, which similarly uses energy-intensive processes to treat seawater, satisfies up to 30% of demand.
Though the latter two sources have the advantage of being drought-and-weather-proof amid challenges posed by climate change, both treatment methods require between five and 17 times more electricity than processes used to treat rainwater, which has in turn raised operational costs.
Singapore’s costly water production recently brought about a 30% increase in water tariffs, announced last July in two phases. Higher prices have already reduced household consumption in Singapore from 148 liters to 143 liters per person per day, the sharpest drop in a decade. The measures are unpopular and a potent gripe among netizens.Businesses which require water for their processes have also been impacted by increased costs according to local media reports, spurring concern among some that price hikes – including increased electricity tariffs and a carbon tax set to be levied next year – could dampen competitiveness in the manufacturing sector.
Since 2002, the PUB has invested S$453 million (US$333 million) in water research and development, much of which has explored the optimization of treatment processes that require less electricity. The water agency’s target is to double the amount of clean water it produces today by 2060, without using more energy and waste than produced currently.
That would require enhancing processes such as reverse osmosis to consume significantly less energy according to Sebastian Lennox, managing editor of the Oxford-based Global Water Intelligence, who described the strategy as “incredibly ambitious” but ultimately achievable in light of the PUB’s “promising reductions in energy consumption.”
Though Lennox cautions that “there is no one big solution around the corner,” advanced technologies piloted by the PUB for use in the Tuas Water Reclamation Plant (WRP) show the water agency is “pushing the boundaries.” The innovative S$9.5 billion (US$6.9 billion) facility will utilize energy generated by solid waste incineration for used water reclamation.
Construction of the facility, located at Singapore’s westernmost point, is currently in progress and is set to be completed by 2025. Tuas WRP will bring the city-state closer to its goal of increasing NEWater supply from 40% to 55% in order to meet Singapore’s long-term water demand, which is expected to double from current levels by 2060.
“In terms of challenges,” says Lennox, “desalination plants and reuse plants cost a lot of money and that ultimately needs to be paid for by the customers through higher tariffs.” Singapore can “use much more of its current wastewater for NEWater production and put it back into the drinking water network” to achieve water security, but it will be costly.Masagos Zulkifli, Singapore’s Minister for Environment and Water Resources, reasons that rising operational costs have made recent water price increases essential and are also the best way for Singaporeans to register water’s strategic importance. Last year, he claimed water would remain affordable for most businesses and households and “within 1% of household income.”
“We will always make our water affordable. If industries find the water too expensive and unaffordable, we would lose investment,” said Harry Seah, PUB’s Assistant Chief Executive, who spoke to Asia Times on the sidelines of the Singapore International Water Week conference. “The end goal is to deliver an output of services at the lowest carbon, water and waste footprint.”
While Singapore continues to develop the infrastructure and technology needed to meet its water needs, the revival of the water dispute with Malaysia adds yet another potential point of contention between the neighbors.
Singapore has little choice but to plan for any eventuality, including a future scenario where Malaysia may be unwilling to enter a cost-effective deal beyond the expiry of the 99-year water agreement in force since 1962. But so far the wealthy city-state has succeeded in turning a strategic weakness into a technological strength.