Budget 2017: Water prices to rise by 30% over 2 years

Budget 2017: Water prices to rise by 30% over 2 years

The increase in price is a reflection of rising costs of producing water, says Finance Minister Heng Swee Keat in his Budget speech.

The tap water supply in part of the city of Lanzhou, China has been suspended
(AFP/Fred Tanneau)

SINGAPORE: Water prices will increase by 30 per cent in two phases over the next two years, starting from Jul 1 this year. This is the first time in almost 20 years that the Government is revising water prices.

Finance Minister Heng Swee Keat announced this in his Budget address on Monday (Feb 20), almost two weeks after Environment and Water Resources Minister Masagos Zulkifli indicated the Government’s intention to do so.

In his speech, Mr Heng said prices need to reflect the rising costs associated with supplying water. He said the cost of producing water has increased with the Government building more desalination and NEWater plants, as well as laying deeper pipes amid an urbanised environment.

Mr Heng said that such costs are necessary investments. “Water sufficiency is a matter of national survival,” he said. “Imported water and local catchment water currently meet more than half of our water demand, but both sources depend heavily on weather conditions.”

Earlier this year, there was a fear that Singapore’s supply of water from the Johor River could be significantly affected if 2017 turned out to be a dry year. The Linggiu Reservoir, which is a critical factor in Singapore being able to abstract water from the Johor River, saw historically low water levels in 2016.

Mr Heng said the increase in water prices will be seen through the restructuring of the Sanitary Appliance Fee (SAF) and the Waterborne Fee (WBF) into a single volume-based fee. Providing more details, national water agency PUB said these two fees currently go towards meeting the cost of treating used water and maintaining the used water network. The single volume-based fee is a better reflection of the volume of used water discharged, it said.

water prices - annoucned at budget 2017


PUB said the WBF fee will increase to 92 cents per cubic metre for households that consume 40 cubic metres of water or less each month, from July 2018. A second tier of the fee will be introduced at a rate of S$1.18 per cubic metre for households which use more than 40 cubic metres. PUB said this is to discourage households from using excessive amounts of water.

The potable water tariff and the water conservation tax will also be adjusted. For example, the tariff for households that consume more than 40 cubic metres of water a month will eventually increase to S$1.52 from July 2018, up from the current S$1.40. Water conservation tax, which is based on thewater tariff,will go up to 65 per cent from July 2018, up from the current 45 per cent, for households that consume more than 40 cubic metres of water each month.

The above changes will see the price of water going up by 30 per cent, PUB said.

Mr Heng, however, said that for 75 per cent of households, the increase in monthly water bills will be less than S$18 from July 2018. For three-quarters of businesses, the increase will be less than S$25 a month.

The Finance Minister added that the Government will introduce measures to help lower- and middle-class income households offset the increase.

These include an increase in the GST voucher - Utilities-Save (U-Save) rebate to offset utilities bills; a one-off GST Voucher - Cash Special Payment of up to S$200 for eligible recipients; an extension of the rebate for service and conservancy charges (S&CC) and a personal income tax rebate of 20 per cent, capped at S$500.


Water prices for the non-domestic sector, which makes up 55 per cent of total demand, will also be revised. PUB said that from July 2018, the water tariff for such consumers using potable water will be increased to S$1.21 per cubic metre, up from the current S$1.17. The water conservation tax will increase to 50 per cent of the water tariff, up from the current 30 per cent. PUB said the adjustments will take place in phases over two years.

Mr Heng said a water conservation tax on the sector’s use of NEWater will also be introduced. This will be at 10 per cent of the increased NEWater tariff, starting from July this year.

Source: CNA/mo