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International water issues
Two water agreements signed between Malaysia and Singapore in 1961 and 1962 are in force up to 2011 and 2061 respectively. The Tebrau and Skudai Water Agreement was signed in 1961, while the Johor River Water Agreement was signed in 1962. The 1961 agreement allows Singapore to draw up to 0.40 million m3 (86 million gallons) of water daily from the Pontian and Gunung Pulai reservoirs as well as the Tebrau and Skudai rivers, while the 1962 agreement allows up to 1.15 million m3 (250 million gallons ľ 1 gallon = 4.5 litres) of water per day to be drawn from the Johor river. In total, these agreements allow Singapore to draw up to 1.55 million m3 (250.4 million gallons) per day.
Both agreements are honoured under the 1965 Separation Act between Singapore and Malaysia, and lodged with the United Nations. Singapore pays Malaysia (the Johor Government) 3 cents (RM 0.03) for every 1 000 gallons drawn from these rivers. In turn, the Johor Government pays Singapore 50 cents (RM 0.50) for every 1 000 gallons of treated water. Both also contain a provision that allows for a review of water prices in 25 years, and arbitration if there is a disagreement. Prices can be revised in line with the purchasing power of money, labour costs, and cost of power and materials used to supply water. Malaysia did not revise water rates in 1986 and 1987 because of financial considerations. If the Johor government raises the price of raw water, it would concurrently have to pay dearer prices for the treated water it buys from Singapore (Lee Poh Onn, 2003).
In June 1988, a Memorandum of Understanding on water and gas was signed between Singapore and Malaysia that gave Singapore the right to construct more reservoirs and to draw more than what has been presently set for an additional one hundred years.