Public Utilities (Amendment) Bill

Order for Second Reading read.

12.33 pm

The Senior Minister of State for Sustainability and the Environment (Dr Koh Poh Koon) (for the Minister for Sustainability and the Environment): Sir, since our Independence, water supply has always been an existential issue for Singapore.

As a small island nation, we needed a safe and reliable supply of water to ensure our survival and prosperity. Water demand has grown by more than six times since Independence to meet the needs of a growing population and the economy.

Through decades of long-term planning, innovation and investments, we have built up our Four National Taps. Behind each tap lies an integrated water system. This comprises 17 reservoirs and water catchment covering two-thirds of Singapore's total land area, 15 water treatment plants, four water reclamation plants and an island-wide network of water pipelines, drainage and sewerage systems, and the list goes on.

We have overcomed droughts and floods and cleaned up our rivers. And we now enjoy a world-class water system producing safe and reliable drinking water at the turn of the tap, anytime and anywhere. However, we cannot take this for granted.

It is increasingly challenging for Singapore to ensure water security and meet the water needs of our growing population and economy due to two factors: one, climate change; and two, increased water demand.

First, climate change. Some of us may recall that we experienced prolonged dry conditions from around 2014 to 2016, when we last experienced a major El Niño event. At that time, we saw water levels in the Linggiu Reservoir in Johor plunge to an historic low of 20%. This was a far cry from healthy reservoir levels of 80%-90% which we were used to. This was very worrying because the depletion of the Linggiu Reservoir would affect our supply of imported water from Malaysia. It took five years for the reservoir to reach healthy levels again.

Likewise, water levels in local waterbodies also fell during the prolonged dry conditions.

This demonstrates the importance of long-term planning and investment in weather-resilient water sources like NEWater and desalination. Since then, we have built new desalination plants in Tuas, Marina East and Jurong Island, bringing the total to five desalination plants today.

Unfortunately, we cannot prevent a recurrence of such extreme weather events. In fact, climate change is likely to cause such extreme weather events to occur more frequently and with more severe impact.

According to recent reports by the United Nation's World Meteorological Organisation, global temperatures will likely surge to record levels over the next five years. This year, the naturally occurring El Niño is underway once again. This will further raise global temperatures and aggravate the risk of prolonged drought, adding additional stress to our water supply. The temperatures we have experienced here in Singapore for the past couple of weeks, also speak to this increasing trend.

The experience of the previous major El Niño event is a stark reminder that we must not be complacent about our water security.

Second, we also need to expect an increase in demand for resources like water, as our population and economy grow. Singapore currently consumes about 440 million gallons of water per day (mgd), which is equivalent to about 800 Olympic-sized swimming pools.

Our consumption is expected to almost double by 2065, with the non-domestic sector being the major source of demand growth. This is especially so as we continue to draw in and grow high-value but water-intensive industries. This includes the wafer fabrication, biomedical and electronic industries, as engines of economic growth.

It is neither sustainable nor practical in land-scarce Singapore to rely only on building more and more water infrastructure to meet our ever-increasing water needs. Besides competing for land with other uses, construction costs have also risen significantly. This is especially so as we need to construct more of our water infrastructure underground. Each new drop of water costs more than the last. Our newer water sources like NEWater and desalinated water, are energy-intensive and costly to produce.

These factors will add pressure for the Government to increase the water price to fund and operate such infrastructure. Hence, it is crucial that we carefully manage the growth in our water demand.

Sustainable growth in water demand allows us to build additional water infrastructure at a more measured pace. This contributes to a more sustainable cost of producing and supplying water in the long run. By adopting the 3Rs concept – reduce, reuse and recycle – which we are all familiar with, we can conserve water and use it more efficiently, making every single drop of water count.

This Bill serves to update the Public Utilities Act 2001 (PUA) in two main areas: recycling requirements for large water users and to impose charges on large private water suppliers (PWS).

We will also introduce amendments related to the Public Utilities Board (PUB)'s operations, to better support their efforts in ensuring the security of our water supply. I will elaborate on each group of these amendments.

First, on mandatory water recycling requirements. Currently, water demand from the non-domestic sector accounts for about half of our total water consumption. This will increase to about two-thirds of our total water demand by 2065. We must, therefore, make greater efforts to achieve a more sustainable growth in non-domestic water demand.

An important strategy is to raise water efficiency, particularly for large water users.

During the Committee of Supply (COS) earlier this year, my Ministry announced that we will be introducing mandatory recycling requirements on new projects in the wafer fabrication, electronics and biomedical industries. Clause 12 of the Bill will insert a new section 40 in the PUA to reflect this.

I will now elaborate on how we arrived at the specific requirements.

We considered two key factors in determining which industries to introduce water efficiency requirements for. First, extent of water demand; and secondly, potential for water recycling.

The largest water consumers are companies in the wafer fabrication, biomedical and electronics industries. They require large amounts of water for their manufacturing processes, such as rinsing and cooling. Collectively, these companies take up almost one-fifth of the total non-domestic water demand today.

And given the strong investment interest which Singapore has attracted from semiconductor and biotechnological firms in recent years, the projected water demand from the non-domestic sector is expected to increase. We are keen to work with companies in these industries to conserve and improve water efficiency, and thus reduce the growth in water demand.

Apart from looking at industries with high water demand, we also shortlisted those with processes that have high potential for water recycling. This refers to processes that produce fairly clean used or reject water streams, and thus easier to recycle as minimal treatment is required. This allows for water recycling to be done cost effectively.

With business costs and competitiveness in mind, we want to ensure that any requirements imposed will be economically and technologically feasible and viable for the companies.

The wafer fabrication, electronics and biomedical industries fulfil both these criteria of having high water demand and producing water streams with high potential for recycling. However, we also recognise that they each use water differently, and processes can differ from one facility to another. So, we will apply targeted water efficiency requirements specific to the context of these industries.

For new wafer fabrication plants involved in front-end semiconductor manufacturing, we will require a minimum 50% recycling rate. We have observed that current technologies already allow companies to achieve such high recycling rates. For example, the majority of wafer fabrication plants in Taiwan have achieved a recycling rate of at least 75%.

In consultation with the industry and recognising Singapore's unique land constraints, we determined that, for a start, a 50% recycling rate will strike an appropriate balance between having a higher recycling rate, and the technological and economic viability of doing so from the companies' perspective.

We will review the effectiveness and the impact of the proposed requirements, alongside future changes in technology.

For the electronics and biomedical industries, processes are much more diverse. Their use cases for recycled water are more limited, compared to those involved in wafer fabrication. Hence, instead of requiring a minimum recycling rate, we will require the recycling of specified waste streams for these companies. This includes reject streams from processes, such as microfiltration, ultrafiltration and reverse osmosis.

Several companies are already doing so today. One successful example would be Hoya Electronics. They have implemented projects to recycle their reject streams and recover effluents from wastewater. This allowed them to achieve industry-leading recycling rates of over 75%.

We intend for the requirements to apply from January 2024 to new projects, including the expansion of existing plants that will consume at least 60,000 cubic metres of water annually. These requirements will not be applied to existing projects.

We are focusing on new projects as waste stream segregation for water recycling can be designed upfront. Beyond designing for recycling, occupiers of the new projects will also be responsible for ensuring that recycling is done while these projects are in operation.

Existing projects will not be subjected to the new requirements as they will likely face space limitations when recycling equipment had not been planned for previously.

Nonetheless, PUB will continue to work with companies which are keen to increase the recycling rates in existing plants through facilitative measures, such as funding and technical support for recycling projects.

PUB and Economic Development Board have engaged affected companies and industry associations in 2021 and 2022. They were generally supportive of the proposed requirements and agreed with the technical and economic viability of these requirements for new projects. This is also in line with the stated sustainability or environmental goals of many of these companies.

The payback period for the recycling infrastructure is assessed to be typically between two and four years for wafer fabrication companies and less than one year for the electronics and biomedical industries.

Companies can recover the cost of their investments over time and enjoy cost savings in the longer term through reduced water usage. Some companies have even expressed interest in raising their water recycling rates for new projects beyond the mandated 50% and asked if the Government would support their efforts in doing so. PUB has taken in the feedback. We will provide financial support for companies that are willing to invest in technologies to raise their water recycling rate.

PUB reviewed its funding framework for the Water Efficiency Fund (WEF) and the Industrial Water Solution Demonstration Fund (IWSDF), which provide financial support for companies with projects on water recycling and adoption of water-efficient equipment. Since July 2023, we have raised the funding caps for WEF and IWSDF from $1 million and $4 million respectively, to $5 million each for each project.

We understand that some companies may require additional time and support to adjust to the new requirements. As such, PUB will extend its support to companies by making WEF funding available to eligible companies until end-2025 to help raise their recycling rates to the mandatory levels. Thereafter, WEF funding will only be eligible for companies looking to raise their recycling rates above the mandatory requirements.

The enhanced funding incentives will make it more economically viable for the companies to introduce larger-scale water recycling projects, as it greatly reduces their payback period. This is especially so amongst those who recycle above the mandated 50%. Based on PUB’s projections, plants recycling at higher rates, which tap on the funds, can reduce their payback periods to about five years or less, compared to the current payback periods of up to 11 years.

Take GlobalFoundries, for example, a wafer fabrication manufacturing company. Its water recycling project will use innovative state-of-the-art technologies to treat and recycle wastewater from their manufacturing processes. With funding support from PUB’s IWSDF for their new project, GlobalFoundries will be able to raise their recycling rates by 10 percentage points, from 45% to 55%. The project results in water savings of 0.4 million gallons per day and reduces the company’s water bills by around $1.5 million annually. I am glad that companies, such as GlobalFoundries, are actively embracing water recycling as part of their sustainability goals.

Besides funding support, PUB provides technical advice on design plans for new facilities and operations. PUB stands ready to support the industries’ initiatives. This will improve the industries’ competitiveness and strengthen Singapore’s overall water resilience.

Besides managing water demand by introducing water efficiency requirements, ensuring a stable water supply is equally important for our water security.

The next group of amendments introduces charges to large private water suppliers (PWS) to ensure sustainable growth in Singapore’s private water supply. PWS refers to entities other than PUB that harvest rainwater or desalinate seawater following PUB’s approval.

Currently, we have a small private water supply sector that supplies about 1% of the total water demand in Singapore. The sector comprises private desalination plants and rainwater harvesters of various sizes. In recent years, PUB has received an increased number of proposals from PWS to collect rainwater or extract and treat seawater, to provide non-potable water for their own use or for sale. The number of large rainwater harvesters has tripled since 2013 and we expect interest to continue rising. We recognise that in the water supply landscape, PWS provides water that is fit-for-purpose, which allows for the more efficient use of water.

Nonetheless, to ensure overall water resilience, PUB is still expected to maintain sufficient reserve capacity and be ready to ramp up water production at short notice to make up for any disruptions that are faced by PWS. For instance, in a prolonged drought scenario, large rain harvesters will turn to PUB-supplied water sources.

Furthermore, PUB must develop and maintain sufficient capacity in our sewer network and water reclamation plants to collect and treat used water from PWS and their customers.

So, on this basis, the same principles of water conservation and the same contribution towards the national used water system should apply to PWS, just like how they apply to all other water users. We need to ensure that the growth of the private supply of water remains sustainable.

These two principles are reflected in the pricing of PUB-supplied water.

Besides water tariffs, PUB’s customers are subjected to the waterborne tax (WBT) and the water conservation tax (WCT). The WBT is a tax contribution to the national used water system paid by all water users, regardless of whether the premises are connected to PUB’s used water network. The WCT is a tax to encourage water conservation and to reflect the scarcity value of water. Today, PWS’ customers do not pay the WCT nor the WBT.

Clauses 4 and 5 of the Bill introduce amendments to align the treatment of privately supplied water with the existing charging principles for PUB-supplied water.

Specifically, clause 4 of the Bill will amend section 20 to enable the WBT to be charged on water supplied by PWS.

Clause 5 of the Bill will insert a new section 20A to enable the WCT to be imposed under the PUA instead of the Statutory Board (Taxable Services) Act 1968.

The new section 20A will also allow for the scope of the WCT to be expanded to cover water supplied by PWS.

We will take a practical and calibrated approach and impose these charges only on large PWS. To be clear, smaller-scale rainwater harvesters, such as those in some housing estates or households, will not be affected.

The WBT will be imposed on private desalination plants and large rainwater harvesters, defined as those with tank sizes larger than 350 cubic metres. This is equivalent to around 26,000 typical water pails that are commonly used in households. This threshold was determined based on the average daily usage of water by larger rainwater harvesters who collectively harvest the majority of the volume of all privately harvested water. The WBT will be applied to the volume of water supplied for both their own use and for sale. This is in line with the principle of WBT as a tax contribution to the national used water system paid by all water users.

The WCT will only be imposed on water supplied for sale by private desalination plants. The WCT will not be applied to desalination plants supplying water for their own use. This is because we recognise that there is already a strong business motivation to conserve water due to the high cost of desalination. It will also not apply to rainwater harvesters since they are already helping to conserve treated water by using rainwater.

With this calibrated approach, the WBT and WCT are expected to mainly affect entities, such as country clubs, golf courses and industrial premises with tank sizes larger than 350 cubic metres. Small-scale rainwater harvesters with smaller tank sizes of 350 cubic metres and below will not be affected. And those not affected will include those in Housing and Development Board (HDB) estates, community clubs, schools and commercial entities with tank sizes that do not exceed the threshold I just mentioned.

PUB will be installing water meters at the PWS’ premises to measure the volume of water supplied for own use or for sale by these large PWS. This will allow PUB to obtain accurate readings of the volume of water used or supplied by the PWS.

Clause 6 of the Bill will amend section 24A to empower PUB to carry out the water meter installation.

The amendments to section 24A will also empower PUB to require the owner or occupier of the premises to carry out works at the premises that are necessary for the installation of the water meter.

We appreciate that the charges will add to PWS’ operating costs. PUB has engaged the affected PWS on the new pricing policy. The comments and queries received from the rainwater harvesters thus far had been clarificatory in nature, such as how water use would be metered. Owners of private desalination plants raised concerns on the increase in operating costs, especially given the poor business outlook. In response to the concerns of PWS, we intend to impose the charges in early 2025, giving the affected parties more than a year, to give time for transition and to adjust to the changes.

Furthermore, we will phase in the new charges in two steps, with 50% of the prevailing WBT and WCT rates in 2025 and the full prevailing rates to be imposed in 2026.

Finally, a third group of amendments is more technical and relate to PUB’s operations to safeguard our water security. These amendments serve to ensure that the Act remains relevant and effective in empowering PUB to carry out its work.

First, clause 7 relates to powers for PUB to recover the cost of removing the obstruction during emergencies where PUB must act immediately, such as removing obstruction to fix pipe bursts. Clause 10 introduces amendments to broaden PUB’s powers to require relevant persons to remove obstructions over all components of the water installation for repair and maintenance works.

Second, clause 8 introduces requirements for developers to submit diversion plans for PUB’s approval before they start relocating PUB’s water installations. This is to prevent disruptions to water supply and to ensure that the relocated water installations meet PUB’s standards and requirements. The relocation of such installations without PUB’s approval will be an offence.

Third, clauses 4 and 5 deal with matters related to the components of water price reflected in water bills. The WCT provisions will be moved from the Statutory Board Taxable Services Act 1968 to the PUA, as mentioned earlier. This will bring all water price-related provisions under the PUA. PUB will be empowered to grant, with the Minister’s approval, rebates or waivers on components of the water bill. This power may be exercised to grant "leak concessions", for instance, where water is lost through a leak that is beyond a customer’s control and the circumstances justify a reduction in the amount of the water bill to account for the leak.

Fourth, clause 15 introduces a five-year time-bar for monetary claims for overpayments or erroneous payments. This provision aligns with time-bars in other pieces of legislation, such as the Goods and Services Tax Act 1993 and the Customs Act 1960, which minimise agencies’ legal risks from very dated claims. We intend to commence the time-bar from 1 January 2025, about one-and-a-half years from now. This provides a transition period so that customers have sufficient time to seek redress before the time-bar comes into effect.

Finally, clauses 16 and 17 update the current requirements for the service of documents under the PUA. This brings us in line with the overall Government policy to promote digitalisation.

We will also introduce related amendments to the Sewerage and Drainage Act (SDA) under clause 20 to similarly update the service requirements for the purpose of SDA.

In summary, Sir, there is a strong impetus for us to manage growth in water demand and ensure a resilient water supply for Singapore, in order to meet the long-term needs of our economy and our population.

The proposed amendments to PUA will provide PUB with the legislative powers to do so and incentivise industries to do even more to conserve and recycle water through introducing water efficiency requirements to water-intensive industries, and charges on large PWS.

The proposed amendments related to PUB’s operations will allow PUB to more effectively and efficiently fulfil its mission of safeguarding our water security and continue to ensure a safe and reliable water supply for all. Sir, I beg to move.

Question proposed.

Mr Speaker: Mr Louis Ng.

12.59 pm

Mr Louis Ng Kok Kwang (Nee Soon): Sir, this Bill will improve water efficiency requirements, increase PUB’s administrative effectiveness and ensure consistent application of taxes to private suppliers. I have three clarifications to raise.

My first point is on the WBT. Section 20(4)(g) allows the Minister to impose different amounts of WBT for persons "differently situated". It lists situations where a different WBT can be imposed. The explanatory statement states that this amendment is to allow finer calibration to the circumstances where WBT is imposed and the amount of WBT imposed.

Can the Senior Minister of State share specifically what changes to the imposition and calibration of WBT are envisaged? Can the Senior Minister of State also share if the list is intended to be exhaustive? If the list is not exhaustive, will PUB make clear the basis for imposing differentiated WBT?

My second point is on PUB's power on the relocation of any water installation. The new section 26 sets out PUB's powers on the water installations. In granting approval for a water installation, PUB is allowed to impose a condition requiring ownership of any water installation to be transferred to PUB. Can the Senior Minister of State clarify if PUB will make payment to a person who transfers ownership of a water installation to PUB? If so, how will the quantum of payment be determined?

Next, section 26(10) allows an authorised officer to enter the premises and carry out works or take any measures if a person fails to comply with a notice. Given the intrusiveness of these powers, can the Senior Minister of State confirm that reasonable time will be given for a person to comply with the notice? Can the Senior Minister of State also confirm that force cannot be used to secure any entry? What are the types of other measures that an authorised officer may take if there is non-compliance?

My final point is on water efficiency requirements. Section 40 of the amendments introduces water efficiency requirements for new facilities built for business purposes that require water. I understand that there are presently existing best practice guidelines published for certain industries. Can the Senior Minister of State share if further changes will be made to the current best practices guidelines for these industries? Will guidelines be introduced for more industries as well? Can the Senior Minister of State also share whether the water efficiency requirements take into account the present technology that is available to maintain water efficiency?

Sir, notwithstanding these clarifications, I stand in support of the Bill.

Mr Speaker: Mr Don Wee.

1.02 pm

Mr Don Wee (Chua Chu Kang): Mr Speaker, Sir, Singapore and Malaysia have a long-standing history of water agreements due to Singapore's lack of natural water resources. The issue of water supply was a point of tension in bilateral relations between Singapore and Malaysia. There have been occasional disputes and disagreements over water pricing and other related matters. As water is a critical resource, any change or threat to water supply can have significant implications for Singapore's water security and Independence. It is timely that we discuss this Bill as we celebrate Singapore's 58th birthday next week.

I support this Bill but I have a few points for clarification.

Can I confirm that the WBT and WCT will not have any cost implications for the small and medium enterprises (SMEs) and individual consumers?

We are competing with many countries like South Korea to attract MNCs in the wafer fabrication, biomedical and electronics industries to set up plants in Singapore. Will the new water efficiency requirements result in additional cost burdens for these multinational corporations (MNCs)? This may impact Singapore's competitiveness in attracting companies in these sectors. What is the Government doing to support them?

Regarding companies that have genuine reasons for not being able to meet the water efficiency requirements, I hope PUB can take a balanced approach. While we encourage compliance with water efficiency standards, I hope PUB can also consider the challenges faced by individual companies. I hope there will be avenues for companies to seek waivers or apply for exemptions if they can demonstrate valid reasons for not meeting the requirements. PUB should assess each case on its merits and decide whether to grant leniency based on the company's circumstances.

Taiwan can achieve a water recycling rate of 75% in the wafer fabrication industry as manufacturers adopt advanced water recycling and treatment technologies. Can the Government support the development of this technology and upskill the local corporates which play a critical role in this space like advanced water treatment, chemical and particle removal and dilute chemical recovery?

Is the growth in water demand resulting in an increase in the average cost of water production which may be passed on to our Singaporeans? How is the Government addressing this impact in the long run? What role does PWS play in Singapore's water security strategy and what is the desired PWS landscape in the long term? Under what type of circumstances will PUB take immediate action to remove obstruction?

Mr Speaker: Mr Yip Hon Weng.

1.05 pm

Mr Yip Hon Weng (Yio Chu Kang): Mr Speaker, Sir, water remains an invaluable resource that sustains our very existence. Yet, the global challenges of climate change and increasing water demand continue to pose pressing concerns for nations worldwide. As a country known for our prudent water management in the face of resource constraints, we are particularly vulnerable to these challenges.

As we grapple with the anticipated repercussions of climate change on our water resources, it becomes imperative that we adopt a forward-thinking approach and proactively address these issues. I have several clarifications on this Bill.

First, Mr Speaker, Sir, I would like to ask about the mandatory recycling requirements outlined in the proposed amendments. While it is commendable that we are implementing recycling requirements in specific sectors like wafer fabrication, electronics and biomed, we must consider the broader picture. These sectors, though significant contributors to non-domestic water demand, represent only one-fifth of the entire sector. Are there plans to expand the mandatory recycling requirements to cover other sectors as well? Also, what constitutes high water recycling potential? Can this be stretched to either the financial and business sectors or other manufacturing sectors like pharmaceuticals?

The proposed target of achieving a 50% recycling rate for wafer fabrication is a commendable step. However, it is worth noting that Taiwan has already achieved a recycling rate of 75% in the same sector. I would like to inquire about Singapore's plan to move towards a higher recycling rate in the wafer fabrication sector. Additionally, it would be beneficial to understand how the Government intends to support these efforts, be it through the provision of infrastructure or subsidies.

I also wish to better understand the difference between the WEF and the IWSDF. Are the funding caps for these initiatives sufficient to make a substantial impact in achieving our water sustainability goals?

Whilst we seek to meet our water recycling goals, we must be mindful of the costs associated with meeting these requirements, in particular, whether having compulsory water recycling would drive up costs of production and make businesses in Singapore less competitive.

Second, Mr Speaker, Sir, I would like to seek clarifications on the introduced charges for PWS. Can PUB share on the overall numbers of PWS operating in Singapore? What is their impact on the country's overall water system, particularly in terms of capacity and supply? How does PUB plan to make sure that by allowing more PWS, we ensure that it does not go the way of the open electricity market, where a number of smaller companies could not sustain their operations and customers were affected?

Third, Mr Speaker, Sir, I would like to comment on the amendments related to operations. Regarding the provision of legal powers to PUB to conduct operations to safeguard water security, may I ask how often these powers of entry were exercised in the past? I understand that these powers are essential for maintaining water security, but some may view them as intrusive. Hence, I seek an explanation on whether the decision to exercise these powers is based on the severity of the issue at hand, ensuring that the entry is justified and proportionate to the situation, something which Member Louis Ng has also mentioned earlier.

In addition, I note the decision to give PUB's e-notices to accounts pre-designated by customers the same legal effect as PUB's hard copy documents. I welcome the move towards e-notices as more people are adopting them over paper notices. This is also a more efficient and eco-friendly approach. However, I would like to express a concern for some residents, especially seniors, who may have difficulties accessing and reading digital notices. They may have an online account or app, often created on their behalf, but that does not necessarily mean they will use it. I urge the authorities to ensure that appropriate provisions are in place to accommodate and support residents who may need alternative ways of communication to stay updated on water-related matters. This could include an opt-out option for those who prefer hard copy notices.

In conclusion, Mr Speaker, Sir, I support the introduction of these amendments. These changes align with the urgent need to enhance our water management practices and further enhance the foundation for a sustainable water future. It is reassuring to witness our commitment to the principles of reuse and recycle embedded within this Bill.

Nevertheless, it is critical to acknowledge that the journey towards water sustainability extends beyond the measures outlined in this Bill. While the focus on reuse and recycle is commendable, we must not overlook the importance of the "reduce" component in our water story. As a nation with limited natural resources, Singapore must continue to prioritise and persist in public education initiatives that promote water conservation. By instilling a culture of responsible water usage and emphasising the significance of reducing our overall water consumption, we can further safeguard and strengthen our precious water resources.

Furthermore, as we introduce these initiatives to conserve water, we must ensure that the consumers are not burdened by the costs. In particular, PWS should not be permitted to increase prices to offset the new charges as a result of these amendments. In this high inflationary environment, essential public goods, such as water, must continue to remain accessible to our residents. I support the Bill.

Mr Speaker: Mr Gan Thiam Poh.

1.11 pm

Mr Gan Thiam Poh (Ang Mo Kio): Thank you, Speaker. I welcome this Bill which seeks to manage Singapore's water demand, projected to almost double in 40 years' time and safeguard supply.

I support the introduction of mandatory water recycling requirements for industries which use huge quantities of water, as well as giving more legal powers to PUB to ensure our water security.

As for the amendments to impose charges on PWS, I have some queries.

PWS' constructions to collect rainwater or get water from the sea to produce desalinated water need to be approved by PUB. They complement PUB in providing complementary water supplies. Would not the imposition of the WBT and WCT have an adverse impact on PWS, discouraging them from the provision of their services?

Would the Ministry share the profiles of these PWS? How many are there and have their numbers been increasing in recent years? How many of these are rainwater harvesters and desalination plants? To whom do they supply their processed waters?

I would also like to know if the Ministry had engaged with PWS regarding the proposed measures and discussed their concerns. What do both parties think would be the likely impact of the new taxes on this sector? Would the Ministry consider delaying their implementation?

Would the Ministry explain the reasons for the different tax treatments? For example, why are all PWS which produce water for their own use exempted from WCT, likewise for rainwater harvesters?

Are the private producers inter-company and intra-company, that is, so-called related company sales exempted from WBT and WCT respectively for those within the production compound or a related company at other locations? How does the agency manage?

All small rainwater harvesters, defined as below 350 cubic metres, will be exempted from both WBT and WCT. What were the considerations in deciding on this volume threshold?

Finally, what are the Ministry's long-term plans for the PWS sector?

Mr Speaker: Senior Minister of State Koh Poh Koon.

1.14 pm

Dr Koh Poh Koon: Mr Speaker, Sir, I thank Members for their support of this Bill. Let me run through the queries and concerns raised topically. I will begin by addressing the issues related to the mandatory water efficiency requirements.

Mr Yip Hon Weng asked whether there are plans to mandate a higher recycling rate in the wafer fabrication industry, especially when Taiwan has already achieved a recycling rate of 75%. Mr Yip and Mr Don Wee also asked whether the costs associated with meeting the mandatory water recycling requirements will affect the competitiveness of businesses in Singapore.

I want to thank the Members for these questions, which reflect the importance of striking a balance between ensuring water sustainability and business competitiveness. As mentioned in my speech earlier, setting the mandatory recycling rate for the wafer fabrication industry requires careful calibration. We need to strike an appropriate balance between having a higher recycling rate and the technological and economic viability of doing so.

Too low a mandatory recycling rate means that we do not maximise the opportunity to achieve a more sustainable water demand growth. Too high a recycling rate may be economically prohibitive for several companies, which will end up eroding Singapore's competitiveness. We are mindful of potentially higher operational costs and land constraints that become especially salient when the recycling rate goes beyond 50%, as companies will have to adopt more advanced water treatment technologies.

Also, to address Mr Louis Ng's query on whether existing technology was taken into account when deciding the water efficiency requirements, the Government has taken into account not just technical viability, but also economic viability.

After consultations with companies, we found that a recycling rate of 50% would be reasonable and doable currently. Today, the median recycling rate for existing wafer fabrication plants in Singapore is 40%, although some facilities are already recycling beyond 50%. Companies we engaged with agreed that a minimum recycling rate of 50% was technically and economically viable for them.

This is corroborated by the high recycling rates that the companies have declared for their recently commissioned and upcoming wafer fabrication plants in Singapore. For example, United Microelectronics Corporation (UMC)'s expansion plant, which is scheduled to be commissioned in 2024, is designed to achieve a recycling rate of above 60%.

In fact, some companies indicated that they aspired to recycle beyond the mandatory level as part of their corporate social responsibility to conserve resources. PUB certainly welcomes and supports the aspirations of these companies to achieve higher recycling rates beyond the mandated levels.

As climate action gains greater traction globally and resource sustainability becomes more pertinent, we see that consumers and investors are paying greater attention to corporate sustainability efforts. It is, therefore, in the companies' long-term interests to show their commitment towards water sustainability efforts.

Likewise, it is critical for Singapore to continue to show our commitment to water sustainability as a responsible steward of the environment. Introducing mandatory water recycling requirements is a key part of this effort. And as Mr Don Wee rightly pointed out, we must remain an attractive investment and business destination. He raised an important point on providing support to affected companies. Mr Yip Hon Weng asked about the Water Efficiency Fund (WEF) and the Industrial Water Solutions Demonstration Fund (IWSDF), and whether the funding support is sufficient to make a substantial impact on achieving our water sustainability goals.

Since 2007, PUB has been providing funding support, in addition to technical support, to companies that are looking to invest in technologies to raise their water recycling rates. PUB's funding support has greatly reduced companies' payback periods and incentivise them to adopt water-efficient practices.

Under the WEF, companies may apply for funding to perform water efficiency assessments, implement pilot and full-scale water recycling projects or adopt water-efficient equipment. The IWSDF is a sub-scheme under the WEF and supports the adoption of new technologies and innovative water recycling solutions. The projects should utilise emerging or recently developed technologies or innovative applications of existing technologies which have not been implemented in the industry.

Addressing Mr Don Wee's query on the Government's support for companies affected by the water recycling requirements, the IWSDF allows PUB to co-share with companies the risks of adopting novel water efficiency solutions and, through this, tip the cost-benefit balance in the favour of the companies. As of June 2023, 375 successful applicants have received grants under the WEF and IWSDF, with the grant amounts ranging from $10,000 to $4 million per project. When the projects are fully implemented, it would result in potential water savings of over 70 million litres a day.

Mr Don Wee asked about the Government's support to develop technologies for higher recycling rates and to upskill local businesses in this area. PUB, in fact, fosters industry growth through collaborations with local and overseas partners in the water and water-related industries. Areas of collaboration include research, technology development and knowledge management. For example, PUB offers industrial test-bedding sites to help develop new technologies in the water market. I strongly encourage companies to tap on PUB's support schemes to boost their water recycling efforts.

Raising the water recycling rate will contribute to sustainability in water demand growth and enhance Singapore's water security in the long term. Recycling beyond 50% will result in even greater water savings for the companies while placing Singapore in a better position to host more high-value water-intensive investments.

We will review the effectiveness of the proposed requirements, alongside future changes in technology, before considering whether to mandate higher recycling rates or to expand the requirements to other sectors, as Mr Yip has asked.

Importantly, we need to consider that other sectors may have a lower recycling potential due to the heterogenous nature of their processes. This is because they may have waste streams that are of a different nature in terms of quality, quantity and content, making it much more challenging and much costlier to recycle water. Hence, it may not be viable to apply a single mandatory requirement across all industrial sectors. Working with companies and individual sectors to identify relevant water conservation opportunities would be a much more effective approach.

Nonetheless, we may consider extending the requirements in future if it becomes economically and technologically feasible to do so. In the meantime, I encourage businesses in other sectors, such as refineries, petrochemicals and chemicals companies, to refer to PUB's guidelines on best practices to improve water efficiency, as Mr Louis Ng mentioned earlier. These guidelines are available on PUB's website.

Mr Louis Ng asked whether these guidelines would be updated for the wafer fabrication, electronics and biomedical industries in view of the new requirements. Mr Ng also asked if water efficiency guidelines will be introduced for more industries. I want to assure Members that the guidelines are reviewed regularly, along with updates to the best practices and case studies. A second version of the guidebook for wafer fabrication and semiconductor companies was, in fact, published in 2022. In the same year, PUB also introduced three new guidebooks for the commercial laundry, food and beverage manufacturing and biomedical manufacturing companies.

Mr Don Wee asked what will happen if companies have genuine reasons for not being able to meet the water efficiency requirements. He also asked if waivers can be granted based on valid reasons. We understand that some companies may face unique challenges in meeting the water efficiency requirements.

The proposed section 40(8), introduced by clause 12 of the Bill, is meant to address this. It empowers PUB to waive or modify any prescribed water efficiency requirement, if there are good reasons to do so. Such waivers will be considered on a case-by-case basis, taking into account the specific circumstances of the companies, following PUB's technical assessment of the reasons for waivers.

So, I hope that Members have a better understanding of the importance of managing our water demand growth. Besides water security, it also ensures that the cost of producing and supplying water remains sustainable for Singapore in the long run. By carefully managing water demand growth, we can build our water infrastructure at a more sustainable pace, thereby controlling costs, which Mr Wee had asked about.

I will now move on to address issues related to private water suppliers, or the PWS.

Mr Gan Thiam Poh and Mr Yip Hon Weng asked about the profiles and number of PWS in Singapore. Currently, there are around 300 PWS in total. The vast majority are rainwater harvesters, with a small number of private desalination plants. Most PWS collect rainwater or produce desalinated water for their own use.

Mr Gan and Mr Don Wee asked about our long-term plans for the private water supply sector and the role of PWS in our water supply landscape. To ensure the resilience of our overall water supply system, we envision a small private water supply sector comprising mostly small-scale PWS, with the bulk of water still supplied by PUB. The value proposition for PWS is to supply water of varying qualities on a fit-for-purpose basis. For example, instead of using potable water, commercial entities harvest rainwater for landscape irrigation. This enhances our overall water security because it encourages the conservation and efficient usage of potable water.

As Mr Yip Hon Weng accurately pointed out, PWS or their customers could face water supply disruptions if PWS' operations are affected, or if the PWS ceases supply as a business decision. These are, of course, valid concerns. As Singapore's national water agency, PUB must maintain a sufficient reserve capacity so that we can ramp up water production at short notice to supply to the PWS and/or their customers in the event of disruption in the PWS' operations.

Keeping private water supply small would be an important safeguard and manages the enterprise risk for our water system as a whole. If the PWS sector were to grow multi-fold, the PWS sector would place significantly more risk on our water system, and PUB would then need to provision for and invest in more capacity to ramp up production, in case of any disruptions faced by the PWS or cessation of supply.

An overly fragmented PWS sector with an excessive number of small operators would also not be able to fully reap economies of scale and be less economically viable and efficient.

Mr Gan Thiam Poh had several clarifications on the charges, including the intent of introducing the charges and how these charges would apply. As I have shared earlier with Members, we want to take a practical and calibrated approach in introducing the charges to PWS. When determining the applicable threshold for rainwater harvesters, we considered the overall landscape and profile of rainwater harvesters. We observed that most PWS are small-scale rainwater harvesters, such as those in HDB estates and schools, which collectively account for around 20% of privately harvested water.

As a practical and calibrated approach, we will impose the WBT only for large rainwater harvesters, whose tank sizes are greater than 350 cubic metres. This would capture harvesters who collectively harvest the majority, or around 80%, of the volume of all privately harvested rainwater. This will include entities, such as country clubs, golf courses and industrial premises with tank sizes larger than 350 cubic metres.

This will allow us to strike a balance between the ideal policy position that WBT should be applied to all rainwater harvesters while helping the industry manage the administrative costs of compliance. Hence, to Mr Don Wee's suggestion on whether the charges would affect SMEs and individual consumers, I would want to say that those with tank sizes of 350 cubic metres and below will not be affected.

Mr Gan Thiam Poh asked whether the charges would apply to private desalination plants that supply water for their own use within the same premises or to different premises. We have taken a calibrated approach when it comes to the imposition of charges. So, the WBT will apply for private desalination plants for the volume of water supplied, for both their own use and for sale. This is consistent with our approach that all water users contribute to the national used water system.

The WCT is only applicable if the water is supplied to third parties, including subsidiary companies.

Mr Gan also asked why the WCT would not be imposed on PWS supplying water for their own use. The principle behind the WCT is to encourage water conservation. Private desalination plants already have a strong business motivation to conserve water due to the high cost of desalination, while rainwater harvesters are already conserving treated water by just using rainwater. So, imposing WCT on these two types of PWS would, therefore, increase business costs without actually improving water conservation.

Mr Gan asked if the charges would discourage PWS from supplying water. We acknowledge that the charges will add to the PWS' operating costs. To address Mr Gan's concerns and help PWS cope with the transition, PUB will only implement the charges in early 2025, instead of immediately, and adopt a phased approach to implement the charges, as I have said earlier in my opening speech.

PUB has engaged and will continue to engage the PWS and support them during this transition. We have assessed that, unlike small-scale rainwater harvesters, imposing WBT on large-scale rainwater harvesters is unlikely to discourage them from harvesting rainwater. This is because they benefit from economies of scale that make rainwater a financially viable alternative to PUB-supplied potable water.

I would like to emphasise again that the charges will only be imposed on rainwater harvesters with tank sizes greater than 350 cubic metres or private desalination plants.

Mr Louis Ng pointed out that clause 4 of the Bill allows for the imposition of the WBT to be more finely calibrated and asked what changes to the imposition and calibration of the WBT are envisaged. To clarify, section 20 currently enables WBT to be charged on water supplied by PUB only.

We are amending section 20 to enable WBT to be charged on water supplied by persons other than PUB, namely, the PWS. Current provisions in section 20 are being expanded to include “extracted water” and “water derived from extracted water”, so that WBT can be calculated with reference to rainwater and desalinated water.

The intention is to charge PWS the same WBT rates as PUB-supplied water for non-domestic premises, currently at 92 cents per cubic metre, and this will be specified in the subsidiary legislation. PUB will make clear the basis for imposing differentiated WBT when such cases arise.

To conclude the segment on PWS, I would like to reiterate that the introduction of charges is aimed at aligning the treatment of privately supplied water with the charging principles for PUB-supplied water. This is to encourage conservation and efficient usage, regardless of its source. These charges will also help to ensure the sustainable growth of the private water supply sector.

I will now cover the final segment on questions related to PUB’s operations.

Mr Yip Hon Weng asked how often the powers of entry were exercised by PUB in the past and highlighted that such powers should be exercised judiciously and be proportionate to the situation. Mr Louis Ng also asked whether reasonable advance notice would be provided for compliance with notices and whether force would be used to secure entry to premises.

I believe Mr Yip is referring to clause 6 of the Bill, which amends section 24A of the Act that deals with powers to enter premises for installation or maintenance of pipes, water installations and so on acquired by PUB. On average, PUB has to request and gain access to private premises eight times a month to carry out such works.

On the other hand, Mr Ng is referring to the proposed section 26(10) introduced under clause 8 of the Bill. The provision allows PUB to enter premises to carry out works or take measures if a person fails to comply with a notice to stop unauthorised relocation of water installations.

For both sections, PUB will seek the cooperation of the owners or occupiers and advance notice will be given. The entry must be at a reasonable hour or otherwise at a time agreed with the owner or occupier of these premises. Regardless of which section applies, PUB will assess the situation in each case and ensure that any entry into private premises is justified and proportionate.

The power under section 24A is different from the emergency situations in which PUB has to take immediate action, as Mr Don Wee has asked about. Under emergency situations, such as a burst in a pipeline running through private property or disruptions to public water supply, PUB must act immediately to remove obstruction or enter private premises without notice to address the urgent and emergency situation. The provision to act in such emergency situations is in section 24B of the Act.

Mr Louis Ng asked if PUB would make payment to a person who transfers the ownership of a water installation to PUB, as provided in clause 8 of the Bill, which amends section 26 of the Act. Section 26 will be amended to regularise the existing requirement for developers to submit diversion plans to PUB for approval before they start works to divert PUB’s pipes and water installation.

Such diversions are requested solely by the developers carrying out construction works at or in the vicinity of the existing water installation, for their own development projects. As such, after developers divert the water installation, PUB will take over the ownership of the water installation for long-term maintenance and operational flexibility without any payment or cost to the development.

Finally, Mr Yip Hon Weng suggested that appropriate provisions be put in place to accommodate residents, especially seniors, who may have difficulties accessing and reading digital notices. I thank Mr Yip for his suggestion.

Clause 16 of the Bill amends section 70 of the Act to update the various means by which service of documents may be effected by PUB. For example, it will enable PUB to send electronic notices, in place of hard copy documents, to alert customers on high water consumption. The amendment does not provide for e-notices to automatically replace hard copy notices. This is an opt-in system for customers who prefer to receive e-notices in lieu of hard copies. So, I hope this will give the assurance to the Member who raised the question.

Mr Speaker, Sir, as I have said in my opening speech, we have come a long way since Independence to achieve water security. The proposed amendments under this Bill serve to ensure that the Act remains relevant and effective in safeguarding our water security through sustainable water demand management and reliable supply of water, especially in light of climate change and increasing water demand. Sir, I beg to move.

1.36 pm

Mr Speaker: Are there any clarifications for Senior Minister of State Dr Koh Poh Koon? None.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Dr Koh Poh Koon].

Bill considered in Committee; reported without amendment; read a Third time and passed.