The Malaysian government is finalizing a revised raw water selling price and expects to be propose this to Singapore in the near future.
Changes to the 1962 Johor River Water Agreement which governs water supply essential to Singapore have been a major effort of Malaysia Prime Minister Mahathir Mohamad. The price-revision conditions in the agreement have long been a major point of bickering between Malaysia and Singapore for a number of years and discussions between the two sides on alternatives have not progressed.
"We know it is going to be tough," said Malaysia Foreign Minister Saifuddin Abdullah in a 20 May interview with Nikkei Asian Review.
According to the Agreement that expires in September 2061, Singapore water agency PUB has the exclusive right to draw up to 250 million gallons per day (mgd) of raw water from the Johor River at 0.7(Singapore) cents per gallon. In return, Johor is entitled to purchase up to 5 mgd (or 2 percent of withdrawn water) treated water at 50 (Singapore) cents per 1,000 gallons.
As reported in OOSKAnews, Malaysia Prime Minister is of the view that the price negotiated in 1962 is not representative of current price. Mahathir made it clear that the price structure is “manifestly ridiculous” and, since his re-election, has made it clear that the terms would be re-negotiated. Singapore says the price for the treated water is does not reflect market realities.
Responding in Parliament to a July 9 question about bilateral relations with Malaysia, Singapore Foreigh Minister Vivian Balakrishnan said the 1962 deal is “not an ordinary agreement” and that Singapore will fully honor the terms, including the price of water stipulated. “The 1962 Water Agreement was guaranteed by both Singapore and Malaysia in the 1956 Separation Agreement, which in turn was registered with the United Nations, “ he said. “Any breach of the 1962 Water Agreement would call into question the Separation Agreement, which is the basis for Singapore’s very existence as an independent sovereign state.”
In the meantime, the state of Johor is developing water projects in order to reduce its reliance on Singapore for treated water.