Budget debate

5 key questions on water

The price of water has not gone up in 17 years, since 2000. There is never a good time to raise prices, noted Finance Minister Heng Swee Keat.
The price of water has not gone up in 17 years, since 2000. There is never a good time to raise prices, noted Finance Minister Heng Swee Keat. ST PHOTO: DESMOND WEE
STRAITS TIMES GRAPHICS

Over the past two days, ministers Masagos Zulkifli, Chan Chun Sing and Heng Swee Keat answered key questions MPs had on the water price hike. Here is a summary of their responses.

1. WHY MUST THE PRICE OF WATER RISE?

The price of water has to reflect what is called the long-run marginal cost (LRMC) - that is, the cost of supplying the next available drop of water.

This is likely to come from Newater and desalination plants.

As there is a limit to recycling used water in Newater plants, three desalination plants are being built within the next three years.

As more used water is reclaimed for Newater, the liquid waste is more difficult and costly to treat.

Building pipes to deliver water has also become pricier, as Singapore becomes more built up.

 

Pricing water right will ensure users conserve it, and enable investments in water infrastructure.

2. WHY HIKE THE PRICE NOW?

The price of water has not gone up in 17 years, since 2000. There is never a good time to raise prices, noted Finance Minister Heng Swee Keat.

But the costs of producing water are rising. PUB plans to invest $4 billion in additional water infrastructure over the next five years.

The Government is also making investments in the sewerage network. This includes the Deep Tunnel Sewerage System, which will be ready in 2025 and will cost more than $4 billion. Another $3 billion will also be spent on other sewerage network projects, and to strengthen the resilience of the island's water supply.

Also, water levels in Johor's Linggiu Reservoir, from which Singapore draws its water, have been falling in recent years, and climate change could worsen matters.

3. HOW DID 30 PER CENT FIGURE COME ABOUT?

The Government still needs to build more desalination plants and Newater plants. So details on the costs involved in aspects of water production are commercially sensitive, and revealing specifics could prejudice future bids. But Environment and Water Resources Minister Masagos Zulkifli told MPs that even with the 30 per cent hike, the price of water would be below cost.

4. HASN'T TECHNOLOGY HELPED?

Technologically, Singapore has squeezed everything it can from the current water processing technology. It will take several more years to achieve the next breakthrough and bring it to a deployable scale.

5. WOULDN'T THERE BE A KNOCK-ON EFFECT ON OTHER COSTS?

The price hike translates into 75 per cent of businesses seeing an increase of less than $25 per month in water bills - or less than $1 a day.

Some businesses have said they will not increase prices.

Extra U-Save rebates for households means those in one- and two-room HDB flats will not see any increase on average.

For other HDB flat types, monthly water bills will go up by between $2 and $11 per month.

Overall, spending on water will remain at about 1 per cent of household income for most families.

A version of this article appeared in the print edition of The Straits Times on March 03, 2017, with the headline '5 key questions on water'. Print Edition | Subscribe