SINGAPORE - Singapore has reiterated that both Malaysia and the Republic have to adhere fully to the 1962 water agreement, after Malaysian Prime Minister Mahathir Mohamad criticised the price of raw water sold to Singapore as “ridiculous” and said he planned to renegotiate the pact’s terms.

In a statement on Monday (June 25), a Ministry of Foreign Affairs (MFA) spokesman said the 1962 treaty was guaranteed by both governments in the Separation Agreement, which was registered with the United Nations when Singapore broke away from Malaysia in 1965.

"Both sides must comply fully with all the provisions of these agreements,” the spokesman said.

In separate interviews with Channel NewsAsia (CNA) and Bloomberg Television, Tun Dr Mahathir revived the water price issue which was a recurring source of tension between both countries especially during the later half of his previous term as prime minister between 1981 and 2003.

He told CNA that the price – 3 sen per thousand gallons – is “ridiculous”, and that Malaysia will approach Singapore on renegotiating the terms of the deal.

Asked if he will talk to Singapore about going back to the drawing board on the issue, Dr Mahathir said: “We are studying the case properly and we’ll make a presentation.”

However, he said it is “not urgent” during a news conference after a Parti Pribumi Bersatu Malaysia supreme council meeting on Monday.

On whether the Cabinet discussed the matter before his media interviews, he replied: “We didn’t discuss the water issue. But I was asked by the press.”

The water agreement, which expires in 2061, entitles Singapore to draw up to 250 million gallons a day (mgd) of raw water from the Johor River daily. In return, Johor is entitled to a daily supply of treated water of up to 2 per cent or 5 mgd of the water supplied to Singapore.

Singapore pays 3 sen per thousand gallons of raw water, and sells treated water back to Johor at 50 sen per thousand gallons.

In his interview with Bloomberg on Monday, Dr Mahathir criticised the 1962 water supply deal with Singapore as “too costly”, and said it is among the issues with Singapore “that we need to settle”.

This follows on his announcement last month that Malaysia plans to scrap a multi-billion dollar high-speed rail (HSR) line from Kuala Lumpur to Jurong East. He has yet to inform Singapore about its intent, he confirmed during the CNA interview.

In an interview with The Straits Times in March, before he won the election last month and became prime minister for a second time, Dr Mahathir described the price of the water sold to Singapore as “absurd”.

The legally binding 1962 treaty contains provisions that make clear Malaysia cannot unilaterally raise the water price anytime it wants.

A veteran diplomat who declined to be named told ST Dr Mahathir is reviving the water price issue now as he has never accepted the terms of the 1962 pact.

The 1961 and 1962 water agreements provided for a price review after 25 years – in 1986 and 1987 respectively. Malaysia chose not to review the price then, said MFA in an article on its website on the issue.

But Singapore allowed for a renegotiation of the issue when Dr Mahathir later raised it in 1998.

Over the span of four years, both countries underwent several rounds of talks on water and other bilateral issues as part of a package.

Malaysia continually raised its asking price for water, and the matter became a sore point in relations.

In October 2002, Dr Mahathir decided to abandon the process. In January 2003, then Foreign Minister S. Jayakumar made public all correspondence on the matter, and the Government released a booklet, Water Talks, to debunk Malaysia’s claims.

In it, the Government said that it costs Singapore RM2.40 to treat every thousand gallons of water. By selling at 50 sen, Singapore is providing a subsidy of RM1.90 per thousand gallons of water.

It also said Johor sold the treated water to Johoreans at RM3.95 per thousand gallons, which amounts to RM46 million in profits a year.

All in, Singapore has paid over $1 billion on various water treatment infrastructure, including building a dam to create the Linggiu Reservoir that increases the yield of the Johor River, said the Government.

In a Facebook post on Monday, diplomat Bilahari Kausikan said Malaysia buys “considerably more” treated water from Singapore than it is entitled to under the terms of the agreement. “Why should it do that unless it is getting a good deal?” he wrote.

In a written parliamentary reply in 2017, Foreign Affairs Minister Vivian Balakrishnan said Singapore has been regularly supplying Johor with 16 mgd of treated water – in excess of its entitlement.

Mr Kausikan said he believes Dr Mahathir is now raising water “only as a diversionary tactic” in preparation to ask for a waiver or reduction of the compensation Malaysia has to pay Singapore if it formally cancels the HSR project.

“His intention is to make the Singapore government look unreasonable hoping, first, that Singaporeans will pressure our government on his behalf, and, second, to set up an alibi with his own people,” he said.

“All this is out of Dr M’s standard play-book. Singaporeans should not be deceived. Good neighbourliness ought to be a two-way street.”