Large rainwater harvesters, private desalination plants to be taxed from early 2025

SINGAPORE - Private water suppliers that harvest rainwater and those that treat seawater on a large scale will be taxed by national water agency PUB from early 2025.

This will apply to suppliers who provide non-potable water for their own use or for sale, with the new tax largely affecting country clubs, golf courses and industrial premises, said Senior Minister of State for Sustainability and the Environment Koh Poh Koon in Parliament on Thursday.

This comes as water demand is expected to almost double by 2065, with the non-domestic sector being the major source of demand growth. Singapore currently consumes about 440 million gallons of water per day – equivalent to about 800 Olympic-sized swimming pools.

The amendments to the Public Utilities Act 2001 will allow PUB to effectively manage water demand and ensure water supply resilience in the long term to meet the needs of the population and the economy, Dr Koh said.

PUB has seen an increase in the number and scale of these private suppliers. In case these suppliers face disruptions or stop supplying to their customers, the agency would need to maintain a sufficient reserve capacity to ramp up water production at short notice, he explained.

The reserves will help to ensure overall water resilience, he added, noting that the private water supply sector currently supplies about 1 per cent of total water demand in Singapore.

“Keeping private water supply small would be an important safeguard... If the (private water suppliers) sector were to grow multifold, it will place significantly more risk on our water system,” added Dr Koh.

The charges will be introduced from early 2025 in two phases – starting with 50 per cent of the prevailing waterborne tax (WBT) and water conservation tax (WCT) rates in 2025. Dr Koh did not specify how much the taxes will likely be.

The full prevailing rates will apply from 2026, to provide time for private water suppliers to adjust to the changes, said PUB.

There are around 300 private water suppliers, of which the majority are small-scale rainwater harvesters, such as in HDB estates and schools. This accounts for about 20 per cent of privately harvested water. There are also a small number of private desalination plants, said Dr Koh.

Large rainwater harvesters, which collect rainwater in a harvesting tank for treatment, would have to turn to PUB-supplied water sources in the event of a prolonged drought, said Dr Koh.

He noted that the number of large rainwater harvesters has tripled since 2013.

“Furthermore, PUB must develop and maintain sufficient capacity in (its) sewer network and water reclamation plants to collect and treat used water from private water suppliers and their customers,” said Dr Koh.

“On this basis, the same principles of water conservation and the same contribution towards the national used water system should apply to private water suppliers, just like how they apply to all other water users.”

Currently, in addition to water tariffs, all water users pay a WBT – a contribution to the national used water system – and a WCT to encourage water conservation and get users to reflect on the scarcity value of water.

Dr Koh said that the WBT for non-domestic premises is at $0.92 per cubic metre of water.

PUB is also introducing these taxes to large private water suppliers.

The WBT will be imposed on the volume of water supplied by private desalination plants and large rainwater harvesters – those with tank sizes of more than 350 cubic m – for their own use or for sale, said PUB in a separate statement on Thursday.

The charges will not apply to small-scale rainwater harvesters such as those in HDB estates, community clubs or schools.

The WCT will be imposed only on the volume of water supplied for sale by private desalination plants. Dr Koh said it will not apply to desalination plants that are supplying water for their own use, as the agency believes there is already a “strong business motivation” to conserve water due to the high cost of desalination.

Rainwater harvesters will not have to pay the WCT, as they are already helping to conserve treated water by using rainwater, he added.

Separately, PUB will also be introducing water efficiency requirements in water-intensive industries with high potential for water recycling.

This includes companies in the wafer fabrication, electronics and biomedical industries, as these firms collectively take up almost one-fifth of the total non-domestic water demand currently.

Wafer fabrication plants involved in front-end semiconductor manufacturing will be required to have a minimum 50 per cent recycling rate, as technologies already allow companies to achieve high recycling rates, said Dr Koh.

However, for the electronics and biomedical industries, their processes are more diverse and their use cases for recycled water are more limited compared with wafer fabrication.

Hence, instead of a minimum recycling rate, these companies will require specific waste streams instead.

These requirements will kick in from January 2024 for new projects, including the expansion of existing plants that will consume at least 60,000 cubic m of water annually. The requirements will not be applied to existing projects.

Noting that the wafer fabrication sector in Taiwan has already reached a 75 per cent recycling rate, Mr Yip Hon Weng (Yio Chu Kang) asked if there are plans to raise the sector’s recycling rate here beyond 50 per cent.

Dr Koh said too high a recycling rate may be economically prohibitive for several companies, which will end up eroding Singapore’s competitiveness.

“We are mindful of potentially high operational costs and land constraints that become especially salient when the recycling rate goes beyond 50 per cent, as companies will have to adopt more advanced water treatment technologies.”

He added that the median recycling rate for existing wafer fabrication plants here is 40 per cent.