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We examine PUB’s profit margin after latest water price increase

Desalination plants convert sea and fresh water into drinkable water. NEWater plants convert treated used water into drinkable water.

Together both of them form half of Singapore’s water sustainability strategy.

Although we can meet 50% -60%of our demands through ‘cheap’ imported water, our source is being depleted and is constantly under threat.

We can no longer depend on Linggui Reservoir in Malaysia. Water levels of Johor’s Linggiu Reservoir, which enables Singapore to draw water for import, have fallen from 80 per cent in early 2015 to 20 per cent in October last year, before making a “slow recovery” to the current 27 per cent.

Even Foreign Minister Vivian Balakrishnan acknowledged that there is a “significant risk” that the reservoir may run out of water this year if 2017 turns out to be a dry year and this would inevitably pose severe problems for Singapore and Malaysia if it happens.

Continuing to build and invest in NEWater and Desalination plants and maximising our catchment area is Singapore’s only way to ensure our survival.

PUB’s PROFIT MARGIN

Singapore’s water agency, Public Utilities Board (PUB), posted a S$166 million profit in their financial report in 2016. You may view the PUB annual report here.

With such a huge profit margin, why do they need to increase water prices by 30% ($0.60 per 1000liters)?

A 30% increase will likely shore up PUB’s profits by at least S$50 million in next year’s financial result. PUB already has a sizeable profit, why are they deliberately charging Singaporeans more?

Two reasons.

COST OF NEWATER AND DESALINATION PLANTS

Singapore has 5 NEWater plants and 4 Desalination plants.

The latest NEWater plant cost PUB $170 million.

The desalination plant was $400-$500 million. 

Add the cost of the previous plants to the sum and that is already billions of dollars worth of infrastructure there.

Unbelievably, PUB is still investing more and will expand its desalination and NEWater capacities to meet up to 85 percent of Singapore’s water needs by 2060.

DESIGN AND MAINTAINANCE OF INFRASTRUCTURE

You don’t want ugly pipes. You complain if your house is beside the ‘longkang’. You want water catchment areas to be integrated with the rest of Singapore’s infrastructure (i.e roads, houses, and parks) so that it reflects a first world country (and not Malaysia). To top it off,  you also want a solution that is earth-friendly and sustainable.

Your expectations are warranted, but you must also understand that they are driving up your water cost; rising costs of asset maintenance and replacement, as well as resources like energy, chemicals, materials and manpower. Expensive methods like pipe-jacking and tunnelling would also be needed, given the laying and replacing of Singapore’s pipelines in an increasingly urbanised landscape.

BACK TO PUB ANNUAL REPORT 2016

Now, let’s go back to PUB’s profit of $166 million in their annual report and their latest announcement of a $0.60 increase per 1000 litres of water.

We called them ruthless and profit-minded. Opposition members stopped short of calling them, traitors.

Their insides are literally dying from reading all these comments on FB. Would a deficit be a better position for them? After all, the government sure can help mah.

PUB submits their audited statements to parliament every year, how come none of the opposition members pointed out that the surplus was a problem?

$0.60 increase for 1000 litres of water. That is all they ask of you so that they can ensure a sustainable and green water supply for future generations.

Still, think it’s too much*?

*We have not included the U-Save, GST Vouchers and 20% income tax rebate given by the government to cushion the impact of the water price hike.  After 17 years without a hike, all PUB ask, is $10 more. 

1 Comment

  1. Jambu Tree

    you might want to highlight that profits were only after government top up. The last time they posted a pretty government top up profit was in FY 2009. All info available on their financial statements.

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