1. Next year, 2011, one of the agreements to supply up to 86 million gallons of water per day (mgd) from Johore to Singapore at 3 sen per 1,000 gallons will end.
2. I understand Johore is still buying treated water from Singapore for 50 sen per 1,000 gallons. The amount purchased should not exceed 12 per cent of the raw water bought by Singapore.
3. The agreement also stipulates that the price of raw water and treated water can be renegotiated and changed if both parties agree. Should the raw water price be revised upwards Singapore would be entitled to revise the price of treated water.
4. If, for example, under the current agreement the water price is increased to 6 sen per 1,000 gallons, i.e. 100 per cent, Singapore can insist on the same percentage price increase by 100 per cent i.e. from 50 sen per 1,000 gallons to one Ringgit per thousand gallons.
5. If both sides agree on this quantum of price increase, Singapore would actually earn more from selling treated water to Johor than Malaysia would earn from selling raw water to Singapore.
6. Almost 10 years ago Johor was allocated sufficient money to build its own treatment plant so as not to buy treated water from Singapore. I am told that for reasons unknown, despite building its own treatment plant Johore is still buying treated water from Singapore.
7. Johore sells raw water to Melaka at 30 sen per 1,000 gallons. It seems that Johore is less generous towards Melaka than it is towards a foreign country. The wisdom of this escapes me.
8. Whatever, in 2011, a new agreement to supply Singapore with raw water from Johore may have to be made, I think that despite Singapore's desalination plant, despite Newater, and new reservoirs, Singapore would still need raw water from Johore. We should be willing to supply the people of Singapore with raw water.
9. The question is whether we should sell at 3 sen per 1,000 gallons and buy at 50 sen per 1,000 gallons of treated water as before or we should extract better terms.
10. Malaysian negotiators are unduly generous and we often provide ourselves with no exit clause. I will not cite the cases.
11. The public, the Johore people in particular, should be assured that we don't make agreements which are indefensible this time.
Resources: Dr. Mahathir blog.
