Malaysia state to end Singapore treated water deal

Malaysia state to end Singapore treated water deal

Kuala Lumpur Reuters

Malaysia plans to end its deal to buy drinking water from neighbor Singapore next year when it finishes a 650 million ringgit (US$171 million) treatment plant, the New Straits Times reported on Thursday.

"Barring any major problems, the project should be completed by April next year," southern Johor state Chief Minister Abdul Ghani Othman was quoted as saying by the paper.

"The state government will then be capable of supplying water for the whole of Johor without depending on Singapore's PUB plants once this project is completed," he added.

Water has long been a contentious issue between the often testy nabbers. Malaysia and Singapore agreed last September to end a series of long-standing disputes, including over water, a critical issue in the resource-scarce city state of Singapore.

Singapore's Senior Minister Lee Kuan Yew and Malaysian Prime Minister Mahathir Mohamad reached a deal on renewing Singapore's water purchase contracts due to expire in 2011 and 2061.

Malaysia, which sells Singapore raw water and buys back treated water, now wants to renegotiate the deal.

"Obviously we are being underpaid," Mahathir was quoted as saying on Monday by the national news agency Bernama.

"What we know is that we have been charging them three sen (Malaysian cents) per thousand gallons of raw water and we know countries like Hong Kong buy their raw water from mainland China at eight ringgit per thousand gallons," he said.

Lee said Singapore had agreed to pay 0.45 ringgit (11.8 U.S. cents) per thousand gallons of raw water until 2061 and 0.60 ringgit from then onwards with adjustments every five years.

Last weekend, the Singapore government said it was still awaiting a reply to a letter sent to Malaysia on December 10 trying to settle outstanding differences, including water supply.

"Singapore has written several times to Malaysia to settle the issues in the package, including water," the foreign affairs ministry said late on Sunday.