Bloomberg News

Singapore Seeks to Lower Cost of Producing Water, Utility Says

December 04, 2012

Singapore is seeking to lower the cost of producing water as it looks for alternative sources through desalination and recycling, that consume more energy.

Singapore, which had relied on Malaysia and its reservoirs for its water needs, has spent S$600 million ($493 million) to S$800 million a year since 2006 on new technologies to boost supply. The push to develop the industry has drawn investments from businesses including General Electric Co. (GE:US) and Siemens AG (SIE), and created local water companies such as Hyflux Ltd. (HYF)

“Cost pressures will come as we consume more energy to produce water,” Chew Men Leong, chief executive of PUB, Singapore’s water utility, said at the Bloomberg Businessweek Global Green Summit in the city state late yesterday. “We have to make sure that our source of water continues to be resilient. Therefore, we have to tap into more unconventional sources like desalination and recycling.”

Desalination and recycling plants produce 40 percent of the 380 million British gallons (456 million U.S. gallons) of water companies in Singapore and its 5.3 million population use daily, according to the PUB. A downtown dam adds a further 10 percent, with the remaining coming from its reservoirs and imports from Malaysia.

Singapore will be able to meet its water requirements independently ahead of the 2061 expiration of a century-long supply agreement with Malaysia “if need be,” Chew said in an interview on July 27.

Malaysia Water

The island that’s almost half the size of the city of Los Angeles is developing its water industry to meet its requirement, which Chew expects will exceed 700 million gallons a day in 50 years. That’s equivalent to more than 1,000 Olympic- sized swimming pools, based on data from the U.S. Environment Protection Agency.

Singapore has relied on Malaysia for its water supply, with the first of four contracts signed in 1927, according to data compiled by the city’s National Library. An agreement in 1961 expired last year while the 1962 accord, which ends in 49 years, gives Singapore 250 million gallons of raw water daily.

Arguments over the water contracts have overshadowed relations between the two countries, which were briefly united in a federation from 1963 to 1965.

To drive home the need to conserve water, Singapore doesn’t subsidize the cost of water, Chew said. The city state introduced a water conservation tax in 1991 that’s imposed as a percentage of total water consumption. The tax was last raised in 2000 to at least 30 percent of the cost of water used.

“We never want to subsidize consumption because the more you subsidize consumption, the more people consume,” Chew said at the conference yesterday. “It’s more important to bring across the true value of the resource they are using.”

To contact the reporter on this story: Sharon Chen in Singapore at schen462@bloomberg.net

To contact the editor responsible for this story: Linus Chua at lchua@bloomberg.net


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