Malaysia: " We haven't lost our right" to review the price of raw water Johor supplies to Singapore

BEN TAN AND SIM BAK HENG New Straits Times 7 Mar 14;

DIFFERENT INTERPRETATION: State govt says the agreements do not mean a price review must take place immediately in 1986 and 1987

JOHOR BARU: THE state government is adamant it has not lost its right to review the price of raw water it supplies to Singapore under the 1961 and 1962 water agreements.

"As far as we are concerned, the agreements are subject to an altogether different interpretation after 1986 and 1987," said state Public Works, Rural and Regional Development Committee chairman Datuk Hasni Mohamad.

He said this in response to the republic's claim that Malaysia had lost its right to review the price after choosing not to do so in 1987.

Singapore Foreign Affairs Minister K. Shanmugan was quoted as saying that "Singapore's position is that Malaysia has lost its right to review the water prices.

"The Water Agreement provided for the review after 25 years.

"Specifically, there was a right to review the price of water jointly in 1987," he said in reply to a question in Parliament on whether Malaysia could raise the price of raw water sold to Singapore at any time before the agreement expired in 2061.

Shanmugam said: "However, Malaysia consciously chose not to review the price.

"It had good reasons for it," he said, adding Malaysia benefited greatly from the current pricing agreement.

Clause 17 of the 1961 agreement and clause 14 of the 1962 agreement stated: "The provisions of paragraphs (i) and (ii) of the foregoing clause of these presents shall be subject to review after the expiry of 25 years from the date of these presents..."

In 2003, the National Economic Council, in arguing its case in the Malaysia-Singapore water dispute, said: 25 years after 1961 and 1962 effectively means "any time after 1986 and 1987. This does not mean the review must take place immediately on these two dates. Any time after 1986 and 1987, both sides are legally permitted to review the price."

Hasni noted it was not a matter of whether the state government had reviewed the prices or not or missed the opportunity to do so in 1986 and 1987.

"As far as the state government is concerned, we want the matter to be discussed bilaterally."

The Johor-Singapore water deal surfaced last month when Hasni revealed the agreements were set to undergo a review after the Attorney-General's Chambers had given the state government the green light to reassess the rate.

He was quoted as saying Johor was expected to raise the rate sometime this year.

Although the rate has yet to be announced, it is believed the state government will stick to the number proposed during the tenure of former prime minister Tun Dr Mahathir Mohamad, which was 60 sen per 1,000 gallons of raw water.

Johor has been making RM7,500 daily from the sale of 250 million gallons of raw water to Singapore at 3 sen per 1,000 gallons (4,546.09 litres) for the past 53 years.

The state government spent RM2,500 daily on the purchase of five million gallons of treated water from the city-state at 50 sen per 1,000 gallons.

This means Johor makes a net gain of only RM5,000 daily.

It was reported that officers from the A-G's Chambers had met with the Johor legal advisory team in Kuala Lumpur in early January and gave them the green right.

Hasni said: "The A-G's Chambers will not simply grant the state government the green light to revise the rate if it has no confidence in the matter.

"Since we have been given the green light from the A-G's Chambers, this means we are in a position to negotiate. As far as the legal aspect of the water agreements are concerned, we will refer it to the A-G's Chambers."

Hasni said raising the price of raw water was long overdue and Malaysia had been doing a social service by selling raw water to Singapore at a low rate for too many years, saying the new rate would reflect the actual price of raw water.

Attorney-General Tan Sri Abdul Gani Patail, meanwhile, said he respected the republic's stand on the agreements but maintained that Malaysia also has its own views regarding the water issue.

"Despite both countries having differing views on the matter, I hope that the issue can be settled in an amicable manner.

"In terms of fairness, both sides will have to look into the matter in a friendly and harmonious way to settle the issue."

Johor Baru member of parliament Tan Sri Shahrir Samad said the contention now was that the water rate was too low and that Johor was trying to revise the rate based on the legal aspect.

The veteran politician said Johor was not exploiting the issue.

Revising the rate was a question of rationality and sensibility in the spirit of neighbourliness, he said.

Shanmugam maintained that neither Malaysia nor Singapore can unilaterally change the price of raw water sold to Singapore following the terms of the 1962 Water Agreement.

He said the agreement was guaranteed by both governments in the Separation Agreement in 1965, which was registered with United Nations, where both countries have to honour the Water Agreement and the guarantee in the Separation Agreement.

Any breach of the agreement would be a breach of the Separation Agreement and international law, he said, adding that Malaysian leaders had acknowledged that the country had benefited from the current arrangement, which was why it decided not to review the water prices in 1987.