Wednesday, 20 July 2016

Sui Pian

On 17 July, the PUB reported that Johor Water Dept had requested, on an urgent basis, that SG (through the PUB) provide an additional 6 million gallons of treated water per day for three days, staring from Sunday 17 July.

PUB obliged.

It was also reported that Singapore already provides on an on-going basis, 16 million gallons per day (mgd) of treated water to Johor. Under the 1962 water agreement, SG may draw up to 250 mgd of raw water from the Johor river and is obliged to provide treated water in return up to 2% of raw water drawn. So, 2% of 250 mgd, is 5 mgd. But we provide 16 mgd, at Johor's request.

Is that a problem? And why is Johor asking for more treated water than we are contractually obliged?
I don't want to harp on things from the past. Live in the present.

But, those who are ignorant of history... are ignorant of history. And if we fail to learn the lessons of history, we are doomed to repeat it? Or at least have to learn the lessons again.

On the water issue, we had a long drawn out negotiation with Malaysia beginning around 2000 as the first water agreement (1961) was due to expire in 2011 (50 years after the agreement).

The 1961 agreement was for 50 years (until 2011), and allowed SG to draw all the water (in practice about 100 mgd) from the Tebrau and Skudai rivers (hence the name "The Tebrau and Skudai Rivers Water Agreement"). The Agreement also obliged SG to provide up to 12% of the water drawn in treated water to Johor. If the 12% was insufficient, Johor could request for more. Towards the end of the agreement, Sg was providing 17 mgd of treated water a day - 12 mgd (12%) under the 1961 agreement, and 5 mgd (2%) under the 1962 agreement (see below).

The 1962 Agreement is for 99 years (until 2061) and allowed SG to draw up to 250 mgd of raw water from the Johor River, with an obligation to provide up to 2% in treated water to Johor. This 2% works out to 5 mgd based on 250 mgd.

On expiry of the 1961 agreement the facilities built and operated by SG at Tebrau and Skudai Rivers were handed over the Johor Water Dept. This means that they should now have access to 100 mgd - more than enough to cover the "loss" of 12 mgd that SG used to provide under the 1961 agreement.

Except that they didn't or couldn't cover the "loss". At least not completely.

So they negotiated and ask that SG provide up to 16 mgd on a long-term, on-going basis.

SG agreed.

The 1990 Agreement was for the construction of the Linggiu Dam, which would be used to "flush" the Johor River, reducing the salinity (from backflow or inflow from the sea), and improve the quality of the water for treatment. This agreement also had a provision for Johor to sell treated water to SG beyond the 250 mgd of raw water. However, the price for treated water was never fixed, and Johor is still buying treated water from SG. So that never happened.

[If you think about it, building a dam and using the water in the dam to "flush" a river, so that you can draw water from the river to process into drinking water is a very inefficient way to use water. It would have been more efficient for SG to connect directly to the Linggiu dam so that every drop from the dam would be channeled to water treatment. So why, do you think, this approach was used?]

In 2000, SG and MY started negotiating for the extension of the 1961 agreement which was due to expire in 2011 (11 years away). The discussion via correspondence was captured in this booklet, released by the MFA, after MY took to the press to publicise their position and interpretation of the negotiation process. MY was upset (or incensed) that SG published the correspondences, but did not challenge or refute the content of the correspondences. Dr Mahathir just said he felt like a jilted girl whose love letters had been publicised.

Within the correspondence, it was clear that MY kept going back on what was agreed and proposing new and higher prices for water.

In that uncertainty, SG eventually decided that it was a lost cause to try to negotiate a new agreement and turned to NEWater as a solution.

Why did Malaysia make it so difficult to negotiate a new water agreement?

These answers are speculative.

1) To show MY's superiority. SG is much more successful than MY, but SG still relies on MY for basic necessity like water. It is a way for MY to show that they are superior to SG in the most basic way. Moreover, the negotiation was like a childish game of "keep away". MY proposes a price. SG thinks about it and agrees. Then MY changes its mind, raises the price and gives a pretext for doing so. SG thinks about it, and agrees to the new price. MY then raises the price again, citing some other excuses or reference. And so on, and so on.

2) Competition. NEWater was invented as an ultra-clean water to be used for the wafer fabrication industry. However, MY also wanted this lucrative business which is also very water-intensive. But they weren't attracting wafer fab manufacturers (or not attracting enough). So to compete, they thought that if they could make water so expensive or inadequate in SG, the wafer fab companies might move to MY. Explicitly, MY had accused SG of profiteering because of "bunker prices" for water. Bunker prices for water supplied to ships that call at the port is much higher (about MYR25 per 1000 gallons). This is a simplistic comparison, but never mind. In any case, there is not a big market for water. Providing water to ships is a basic necessity and convenience for running a port. And about 1 mgd is provided. Compared to the 150mgd we were drawing from MY (then, in 2000). It's not even 1%. Moreover, it is not like it's a "free" market for water. It's like buying drinks at a tourist trap. You get gouged, but it is the price of convenience.

3) Dr M.

[Dec 2016 Edit: There is a 4th speculative motive: Industrialisation. From the comment within this article/post:
"...The five rivers in the Tebrau catchment with more severe pollution would be the result of increasing industrial development without corresponding improvement in the treatment of effluent discharge into the rivers resulting in pollution of the rivers. If Singapore were still drawing water from the Tebrau-Skudai water plant, we would have objected to and if possible stop the industrial discharge that was polluting the water. So perhaps that is (one reason) why the Malaysians wanted the water agreement to end - so that they would be free to develop industries there without SG's objections.

Maybe. I'd like to think that, but that would attribute a level of strategic planning to the Malaysians that has not been evidenced."]

The real reason Malaysia doesn't want to sell water to us, is because they are losing money!

The argument goes like this: we buy raw water at 3 sen per 1000 gallons, and we sell them treated water at 50 sen. These are the prices agreed on in the water agreement. However, Johor has found that they are losing money! They are in fact PAYING Singapore!

For 250 mgd, we would be paying about MYR7,500 a day. If MY buys the 2% of treated water under the agreement, it would cost them MYR2,500. They would make a net income of MYR5,000 a day. Or about 1000 murtabak in Johor.

BUT, because they ask for 16 mgd on an on-going, permanent, routine basis, they are paying more than MYR7,500 a day - MYR8000. so every day, they pay MYR500 net (or 100 murtabak) after offsetting what we should pay for the raw water.

So the Malaysian complaint is that they sell us water, and they still have to pay us.

Well, if they bought no more than what was contracted (5mgd) they would have net income. But because they choose to exceed the contracted amount, they end up paying us instead.

Anyway, if they don't like paying for treated water, they can just increase their production and reduce their dependence on us, right?

Except, they won't. We had less than 10 years to come up with an alternative plan when the water talks to renew the 1961 agreement was abandoned. They have the water. The technology for treating river water to potability is not difficult. So they can do it. When the 1961 agreement ended in 2011, the facilities on the Tebrau and Skudai Rivers were handed over to Johor water dept. Those facilities had the capacity to process 100 mgd. We used to provide 12 mgd under the 1961 agreement. Now they have the whole thing with 100 mgd capacity. They should be able to cover 12 mgd and more.

But there is no incentive for them to do so.

Why? The cost of treating water (in 2003 pricing) is MYR2.40 per 1000 gallons. We sell it to Johor for 50 sen. So, treat your own water (costing you about MYR2.40) or just buy treated water from SG at 50 sen? Which will you choose?

Secondly, the water is then sold to Johor residents at MYR3.95 per 1000 gallons. That is a clear MYR3.45 profit per 1000 gallons for 16 million gallons. PER DAY!

In one year, the profit from selling our treated water is over MYR20m.

Of this, our "subsidy" to Johor (for treating the water and selling it to them at 50 sen) is over MYR11m per year.

So when the Johor River gets a bit polluted (i.e. harder to treat), would the Johor water dept (their PUB) spend more money to treat the water, or will they ask SG to provide more treated water on an emergency basis? After all, we also draw our water from the Johor River, the same river they claim is too polluted for them to treat.

Which is cheaper?

And that is why MY has no incentive to treat their own water. They have a rich and capable neighbour who can do it better, and sell it to them at a subsidised rate.

But SG can just stick to the letter of the agreement and NOT agree to sell more than 5 mgd right? Of course we can! And be accused of being overly-legalistic, unfriendly, unneighbourly, and tainting all other diplomatic and other relations between MY & SG. We oblige because it creates a "friendly" relationship of mutual help. Raw water for subsidised treated water. And MYR 20m profit for Johor.

Or you can see our subsidised treated water as a "bribe" to grease the gears of the water agreement. Or more correctly, an increasing cost that we are willing to pay for access to water.

Where we are today

So after playing MY's game for a while and getting nowhere, it was beginning to be clear that MY is either not negotiating in good faith, or that we could never come to a reasonable price.

Or, if MY was going to ask for MYR8, then NEWater and Desalination would be viable and cheaper options.

Currently, residents of Singapore pay about $5 per 1000 gallons tap water (converting from $1.17 per cubic metre of water). This price takes into account the cost of treating the water, as well as the distribution cost, and the administrative costs. This also averages out the costs of all the water treatment processes.

How much does it cost to treat water by the various means?

Generally, treating river water would be the cheapest. If we use the MYR2.40 from 2003, that works out to about 80 SG cents per 1000 gallons. Let's say SGD1 today. (Inflation could raise the cost, but a the same time, efficiency and new technology could lower the costs. Let's say $1, and call it a slight over-estimation.

NEWater is the next most expensive process, and treating seawater (desalination) is the most expensive.

From this press release, the price of desalinated water is 45 cents per 1000 litres, or less than $2 per 1000 gallons. But for ease of reference, let's just say $2.

NEWater costs less than desalinated water. About 30 cents per 1000 litres. Or less than $1.20 per 1000 gallons. Again, let's say $1.20.

Therefore if MY were to ask for a raw water price of more than $1.20 (or about MYR3.60 today, it does not make sense to buy water from them.

But how much water do we need?

What are the contribution of Singapore's "four taps"?

Singapore uses about 400 million gallons a day (according to the Straits Times, Aug 5 2015). The 250 million gallons from Johor accounts for 60% of our needs. Newater can supply 30% of our needs (120 mgd), and Desalination about 25% (100mgd.) However, it does not have a proper figure for our local catchment (merely noting that the Marina reservoir can supply 10% of our needs. But we have quite a few more reservoirs).

Wikipedia provides these figures: Imported - 250mgd. Local catchment 200 - 300 mgd. NEWater - 115 mgd (30%). Desalination - 50 mgd (10%). The figure for desalination is half that of the ST figure.

However, the Wikipedia entry was last edited in 2012.

The official MEWR website states that there are 2 desalination plants (with 30 and 70 mgd output).

This latest report notes that 3 more plants will be built in 2017, 2019, and 2020. The capacity of the 3 will be 30 mgd each. This will bring total capacity to 190 mgd.

However, that means today, desalination provides 100 mgd. With a low estimate of 200 mgd from local catchment, 250 from Johor, and 120 from NEWater. For a total of... 670 mgd. Which is more than what we currently need (400 mgd). So we are comfortable.

[So, you might ask, what do we do with the extra water? There is no extra water. The desalination plants which produce the most expensive water, will reduce their output when there is no demand. We will always draw the full 250 mgd from the Johor River because that is the cheapest water to treat. Then NEWater. Then desalination.There will be some minimum output for the plants, and there may be some contractual minimum PUB is required to buy, so those are also considerations.]

By 2020, when all 5 desalination plants are online, and another NEWater plant with 50 mgd is running (due to open this year), we would have 560 mgd from just local sources - desalination plants, NEWater, and Local catchment - 190, 170, 200 = 560.

However, it is anticipated that by 2061 when the water agreement expires, our water need will be doubled - to about 800 mgd.

The strategy from MEWR is to a) conserve water - reduce usage. However, non-domestic use accounts for 70% of water use. So the impact of domestic conservation will be limited. b) increase the water catchment to 90% of the island, from the current 65% or so. c) build more NEWater Plants and Desalination Plants. By 2060, Desalination plants should provide 30% of our water needs. That is, 240 mgd, or about equal to what we currently draw from Johor. NEWater is to provide 55% of our water needs then, or 440 mgd. This leaves about 120 mgd to be covered by local catchment. Which is well within current capacity.

The shortfall, or what we need by 2060, is to build at least one more desalination plant with a 50 mgd capacity, and enough NEWater plants to produce about 440 mgd (up from the current 170, or 270 mgd more). That would seem like 6 to 9 NEWater plants.

[Note/Summary (Dec 2016), The figure for the water agreement is fixed: 250 mgd.
Local catchment (our reservoirs) can provide 200 - 300 mgd. For ease of recall, let's just say it is comparable to imported water: 250 mgd.
NEWater currently provides about 30% or 120 mgd. Or about half of local or imported water.
Desalination currently provides about 25% or 100 mgd today.

Eventually, the plan is for desalination plants to provide up to 30% of future needs (800 mgd) or 240 mgd. And NEWater to provide 55% of future needs, or about 440 mgd. By 2062, the water agreement would have expired and the only other "tap" would be local catchment which would provide up to 25% of our needs.]

What does this all mean?

It means we take survival seriously. It means we take water seriously, because it is necessary for survival.

It means when Johor asks us for more water, we must understand what it means in terms of risks, costs, and our relationship with Johor and Malaysia. It means we must question if an extension of the water agreement beyond 2061 is even feasible. Linggiu reservoir's water level is falling every year, the capacity of the Johor River is probably about 350 mgd now. Climate change may permanently lower that capacity. Johor will need some of that water herself. Which means there may be little left for us. And what is left may not be enough if our needs grow.

[To answer the question I posed earlier - why didn't we just connect directly to the Linggiu reservoir instead of using the water to "flush" the Johor River? For the sake of Johor residents, particularly those who rely on the river for irrigation of their farms, and other purposes.

It may also be legalistic/contractual - the 1962 agreement allows SG to draw water from the Johor River. Not from the Linggiu reservoir. In the 1990 agreement, SG would likely have wanted to draw directly from the Linggiu Reservoir, but Johor might have negotiated this arrangement to benefit those who live along the river, and to preserve the ecological balance of the reservoir and river. Or, SG might have proposed this arrangement for that same consideration. ]

So, we provided Johor with treated water at their request with no "risk" to our water security (we have more than enough, or can "produce" more than enough at short notice. 6 mgd out of our current maximum capacity of 670 mgd is less than 1%. It is not without a "cost", and we are subsidising Johor for treated water, and they KNOW it. They know it because they do their own water treatment and they know how much it costs, and they know 50 sen is a steal.

So sure, we can talk all about being good neighbours, and doing what is right, and being humanitarian, and how water is a critical resource, and we should share if we can. And we can talk about all these without being cynical or being snarky, or feeling superior or acting all superior. There is nothing noble about being superior to our neighbours. If not for a quirk of history, we might be in the same boat. True nobility comes from being superior to one self (it's a quote from Ernest Hemingway).


Andrew Leung said...

I emailed the MND/MEWR Minister/Perm Sec last year to ask if it was possible to make a manmade reservoir by damming up Pulau Ubin and Tekong with the mainland in a semi-circle.

Later this year they announced they are going to join all the drains together and do water recycling. Maybe its cheaper and more efficient to use the mainland to capture excess rainwater and store it underground than build an equivalent size reservoir to Johor at the eastern part of Singapore.

El Lobo Loco said...

Andrew, I can't answer for MND/MEWR so this is just speculation on my part.

On the face of it, your suggestion should be no more different than damming up the mouth of the SG river with the Marina Barrage, to form the Marina Reservoir.

So if that can be done, your suggestion should be possible. The technical feat of building dam and barrages should be possible.

But why not?

We can speculate.

1) Sea water and (brackish?) River water. Your suggestion is basically to dam up part of the sea. The Marina Barrage was to dam up the Singapore River. The river water is more easily treated to potability. Seawater will need the more expensive desalination process. The Marina waters was not immediately usable as a water source. Over time, the barrage was raised and lowered to allow the seawater to flow out, and be replaced by the river water. This took several years, and I am not sure that it has been completed. But it will be if it has not. The Punggol and Serangoon rivers have also been dammed up to form two reservoirs, much like the Singapore River (which also includes the Kallang River, I think).

2) With the area encompassed by your suggestion, there would be a huge area of sea water, and any rivers feeding into it will take a long time to reduce the salinity to levels treatable by conventional process.

3) One other consideration may be the environmental impact of converting the area from a sea into a de facto freshwater lake.

4) Security considerations for P. Tekong. Dams or Barrages would mean at least two points of egress from the mainland and P. Ubin.

5) Desalination. Maybe faster, cheaper, more flexible, and less disruptive (of the environment) than a sea reservoir (which will require maintenance, monitoring, and the payout may be years or decades away.

As I said, these are all speculation off the top of my head. Before coffee. So take it with a grain of salt. Or a shot of seawater.

Andrew Leung said...

Dear El,

Thanks for your reply. I was wondering if I should ask this question on Quora.

I had suggested that they can start small by maybe dam up Coney Island or Pulau Ubin first. You will have to pump out the sea water and clean up the seabed and put in reservoir or treated water. I guess it will smell bad and be expensive.

I think with more desalination plants here in future the sea water quality will become more salty due to the discharge back into the sea.

It would create a greater security concern and need more investment in security.

Have a nice day : )