Water-tariff hike will not blunt S'pore's competitive edge: Masagos

The Singapore government will ensure that the country remains cost-competitive, even with the planned water-tariff hike, said Minister for the Environment and Water Resources Masagos Zulkifli on Wednesday.

Efforts to enhance water efficiency in the industrial and commercial sectors will be key, he said, because these large users are expected to account for the bulk of the country's growth in demand for water until 2060.

Speaking to reporters at an industry consultation session on managing demand for water, he said: "While we need to increase our (water) price, we are also mindful that we have to be competitive globally.

"This is one of the benchmarks (national water agency) PUB puts to itself - to ensure that while it needs to recover its costs, it cannot do so by sacrificing the competitiveness of Singapore or future industries to come."

He was responding to concerns raised by an industry representative that Singapore might "out-price" itself in water relative to other countries, and lose its appeal as an investment destination.

It was announced on Tuesday that water tariffs will be raised, but the details on the quantum and timing of the hike will come when the Budget is unveiled on Feb 20.

Read also: Price of water will go up to ensure sustainable supply

A government representative at Wednesday's industry consultation session said that the need to maintain Singapore's competitiveness was the reason water prices have not been raised till now, although more NEWater was pumped into the reservoirs to boost their levels in 2014.

NEWater, a high-grade reclaimed water that has been purified and disinfected, costs more to produce.

"When you have sustained long-term cost issues, you cannot keep kicking the can down the road," said the official.

The government takes a three-pronged approach to water conservation. Besides water pricing, it tries to encourage water-conservation habits through public-education efforts; it also ensures households and industries use water efficiently through mandatory measures.

Read also: Fifth Newater plant launched yesterday

Singapore now uses 430 million gallons of water a day (mgd), with the domestic sector accounting for 45 per cent, and the non-domestic sector, the rest. Demand by the non-domestic sector is expected to grow until it accounts for 70 per cent of water use in 2060, when total water demand is expected to have more than doubled from today's level.

Mr Masagos said: "Given this, efforts to enhance water efficiency in the non-domestic sector will be key in moderating water demand." Water conservation and efficiency will be crucial as every drop saved means savings on resources and the cost of investing in additional supply, he said.

Since January 2015, large non-domestic water users (those using more than 60,000 cubic metres of water a year) have had to install private water meters and submit a water-efficiency management plan annually to PUB for at least three consecutive years.

Read also: PUB to step up surveillance patrols at Marina Bay after another otter injured by fish hook

PUB is studying the plans and data submitted to develop water-efficiency benchmarks and best-practice guidelines for different sectors. It noted, for instance, that the average recycling rate for wafer-fabrication companies now stands at 45 per cent, but that the figure is more than 60 per cent in some plants - which points to further room for improvement.

Some industry representatives, however, suggested that the most effective measures - especially for capital-intensive industries - are those that target the factory-design stage.

Read also: PUB takes action against contractor responsible for Upper Thomson flood

The Singapore country manager for Micron Semiconductor Asia, Lee Kok Choy, said it is difficult and expensive to change water-usage patterns once a factory is up and running; measures such as an increase in water tariffs or incentives to subsidise better efficiency would not be effective for companies like Micron, he said. "It's at the design stage that works."

Business leaders across industrial and commercial sectors said water now makes up a small part of their operating costs, and do not expect the expected increase in water tariffs to raise their operating costs signficantly, though this depends on the quantum of the hike.

This article was first published on Feb 9, 2017.
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