Masagos: Consumers must feel the full price of water

Environment Minister says water is a "national security issue"

Water prices were increased substantially to reflect its true scarcity value, Minister for the Environment and Water Resources Masagos Zulkifli told Parliament yesterday.

As MPs debated the Budget for the second day, he addressed the hot topic of the tariff hike announced by Finance Minister Heng Swee Keaton Feb 20.

Mr Heng had said the price of water will go up - the first increase in 17 years - by 30 per cent in two phases, starting from July 1, to pay for more costly methods of obtaining fresh water from seawater and get people to conserve water.

On Tuesday, several MPs raised concerns that the price hike could hit smaller businesses with higher costs.

Yesterday, Mr Masagos said water is unlike any other ordinary commodity in Singapore.

"Water is a strategic issue. It is a national security issue. We must price water fully," he said.

"The consumer must feel the full price of water and realise how valuable and precious it is, every time he or she turns on the tap, right from the first drop."

He explained that water costs have also gone up.

For example, the first-year price of desalination for Singapore's first plant - the SingSpring Desalination Plant - in 2005 was 78 cents per cubic metre (m3), but the first-year price for the latest plant at Marina East was $1.08 per m3, about 40 per cent more.

Mr Masagos said there is a limit to recycling water, hence the need to rely on desalination plants, of which three more will be built in the next three years.

He also said PUB is more than doubling the rate of renewal for old pipelines from the current 20km per year, to 50km per year, to minimise disruptions.

This - coupled with the depletion of Johor's Linggiu Reservoir, which Singapore draws water from - means it was urgent that policies and the right pricing are in place to moderate demand to ensure a secure water supply.

Mr Masagos said awarding rebates to those who save water would be counter-intuitive to ensuring they pay for the cost of producing water.

"To give back that cost means we are subsidising the use of water. Any way we change the structure of water that we have today either involves cost or is counter-intuitive to trying to promote the conservation of water," he said.

Graphic: Public Utilities Board

Hougang MP Png Eng Huat had earlier called the quantum of increase "puzzling" and for the Government to open its books to justify the increase.

But Mr Masagos said he was unable to provide details of the computation because of commercial sensitivities.

Aljunied GRC MP Pritam Singh asked if PUB would consider deepening local reservoirs to increase the local catchment.

Mr Masagos said the answer was not as simple, as studies show that a reservoir's yield can be reduced if the bottom of the reservoir is disturbed.

But he said water prices will remain affordable, with 75 per cent of businesses seeing a hike of less than $25 a month.

One- and two-room HDB households will not see any rise on average, while other HDB households will see monthly bills go up by $2 to $11 a month.

"Water will still be affordable. It will still remain within 1 per cent of household income," Mr Masagos said.

This article was first published on March 2, 2017.
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