How does the 1962 water agreement address price revisions?

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The 1962 Water Agreement Stipulates Price Review Mechanisms

The 1962 Water Agreement between Johor and Singapore explicitly provides for a review of the raw water price after 25 years, which would have been in 1987. Under this agreement, Johor was to supply Singapore with 250 million gallons of raw water daily at a rate of three sen per 1,000 gallons. Concurrently, Singapore was to provide Johor with five million gallons of treated water daily at a price of 50 cents per 1,000 gallons.
Provisions for Price Review

The core of the 1962 Water Agreement regarding pricing includes a specific clause for a price review. This review was contractually mandated to occur after 25 years from the agreement's inception, placing the first potential review point in 1987. This provision acknowledges that the economic conditions and the value of the water resource could change over time, necessitating a re-evaluation of the agreed-upon rates.
Current Dispute Over Review Rights

A significant point of contention has emerged concerning the interpretation of this price review clause. The Johor government asserts that the agreement grants them the explicit right to revisit and revise the price of raw water supplied to Singapore. This stance is supported by the Attorney-General's view, which affirms Johor's entitlement to such a review. Conversely, Singapore's position, as articulated by its Foreign Affairs Minister K. Shanmugan, is that Malaysia has forfeited its right to a price review by not exercising it in 1987.
Johor's Proposed Approach to Resolution

In addressing this dispute, the Johor government has indicated a preference for a bilateral discussion to resolve the matter. They have formally communicated with the federal government, highlighting the urgency of addressing the raw water price review in upcoming bilateral talks with Singapore. The state government anticipates that these regular bilateral discussions, which occur every two to three months, will provide a suitable platform to bring the issue of raw water price revision to the forefront.

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How does the 1962 water agreement address price revisions?

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