According to published reports, Johor will not buy treated water from Singapore after the completion, later this year, of its Semanggar water treatment plant of 160 mld or 35 mgd capacity.

The estimated cost of this Zero Dependence Project is more than RM600 million. According to Johor Menteri Besar, Johor would save RM6 million annually if it stopped buying Singapore's treated water at 50 sen per 1,000 gallons.

To analyse the total cost of producing treated water from this plant, let's assume that the project is being wholly financed by a commercial bank with a term loan facility of RM600 million, payable in 25 years and at 7.2 per cent interest per annum.

The total annual loan repayment (capital + interest) will be more than RM52.4 million. With this, the capital cost to produce 1,000 gallons of treated water would amount to RM4.10 for the first 25 years.

Add to this is the production cost (labour, chemical, power etc), which is RM2.40 per 1,000 gallons, the figure used in the ads, and the total cost will amount to RM6.50 per 1,000 gallons or RM83 million per year.

If one compares this to about RM6 million which Johor is currently paying for the same quantity of treated water it obtains from Singapore, can one say that Singapore's subsidy to Malaysia is another RM77 million - an additional amount which Johor has to bear to produce 35mgd of treated water on its own?