Underground sewerage network eligible for financing through borrowing

A major project that will free up space on land by moving facilities for treating used water underground is under way, with about a quarter of the 100km-long conveyance system completed so far.

The $10 billion Deep Tunnel Sewerage System (DTSS) is scheduled for completion by 2025, and will be one of the nationally significant infrastructure projects eligible for financing through borrowing.

"The DTSS is an example of how Singapore builds long term," said Second Minister for Finance Indranee Rajah during a visit to a site for the second phase of the project yesterday. This phase focuses on downtown and western Singapore, while the first phase addressed the northern and eastern parts of the island.

"When you are a small country with very few natural resources, you have to take what you have and be able to maximise it, make it last for as long as you can and to benefit as many people as you can," she told reporters.

This makes the DTSS a good candidate for funding under the proposed Singa, or Significant Infrastructure Government Loan Act, she said.

The Bill for Singa was introduced earlier this month and will be debated when Parliament next sits. If passed, it will allow the Government to borrow up to $90 billion to pay for major infrastructure that will last for at least 50 years. This means the cost will be spread out over many years, with each generation that benefits bearing part of it.

Ms Indranee said the DTSS - a network of deep tunnel sewers that makes use of gravity to channel used water to centralised treatment plants for purification and reuse - will be able to last Singapore for the next 100 years.

Singapore last borrowed for infrastructure in the 1970s and 1980s to pay for the large upfront costs of building Changi Airport as well as the Republic's first MRT lines.

By the 1990s, with the economy growing rapidly, the Government was paying for infrastructure in full from its revenue.

But the situation is different today, said Ms Indranee.

Singapore's needs have grown, and infrastructure projects have become more complex. On top of that, the country is facing financial pressures and constraints such as an ageing population.

"So we have to think about how we're going to finance nationally significant infrastructure," said Ms Indranee.

But there are measures in place to ensure fiscal prudence.

For instance, only "nationally significant infrastructure" can be funded under the proposed Singa law.

This refers to infrastructure that supports national productivity or Singapore's economic, environmental or social sustainability.

Other than the DTSS, other eligible projects could include MRT lines like the Cross Island Line.

Such infrastructure must also last for at least 50 years so as to benefit multiple generations.

"What we are very reluctant to do is to borrow for recurrent expenditure, where you borrow to pay for what we consume today... and it's the young people of tomorrow who have to pay for what we enjoy today - that's not the philosophy that we want," Ms Indranee said.

The DTSS was conceived more than two decades ago to improve Singapore's water resilience, as the system will allow the Republic to better capture every drop of water for reuse.

Construction of the DTSS is being done in two phases.

The first phase, which serves the northern and eastern parts of Singapore, was completed in 2008 and cost $3.4 billion.

Construction for phase two, which is estimated to cost $6.5 billion and will channel used water from the downtown and western parts of Singapore to the new Tuas Water Reclamation Plant, began in 2017.

As at this month, about 24km of the 100km-long conveyance system for phase two has been completed.