The Public Utilities Board (PUB), a statutory board under the Ministry of the Environment and Water Resources (MEWR),  registered a profit of $166.8 million last year because of government grants.

This was revealed by the Senior Minister of State for Defence and Foreign Affairs, Maliki Osman, at a forum on Monday.

The minister was responding to a question about the recently announced rise in water prices which will take effect on 1 July. Households will pay a higher rate, an increase of 30% in two phases, when the new prices kick in.

Some websites have raised questions about the hike and asked if it was necessary, given that the PUB had made profits last year and in previous years.

Dr Maliki explained that the PUB profit “must be seen in the context of the subsidy that PUB received from the Government.”

A check with the statutory board’s Annual Report 2015/16 confirms the numbers.

The Report says:

“The Group recorded a net income after Government Grants and Contribution to GCF and Taxation of S$166.8 million this year (prior year: S$182.4 million). This was 8.6% or S$15.6 million lower than previous year due to increased operating expenses which more than offset the total increase in operating and net non-operating income. The Return on Total Assets (“ROTA”) for the year was 3.0% (prior year: 3.3%).”

GCF refers to the Government Consolidated Fund, which “is analogous to a bank account held by the Government.”

“Subject to any law, the revenues of Singapore are paid into this fund and out of which Government expenditures are made,” the Parliament website says.

In the last financial year, the PUB incurred a loss of $69.3 million before Government Grants, which amounted to $270.4 million.

The grant, as Dr Maliki explained, allowed the PUB to register a profit of $166.8 million, after deducting GCF Contribution and Taxation.

In financial year 2014/15, the amount of Government Grants was slightly higher, at $277 million, which offset the $57.2 million loss, enabling the PUB to register a net income of $182.4 million.

The PUB’s net income is “transferred to Capital Reserve to finance investment in property, plant and equipment.”

And there is the “Government-funded capital expenditure” which came to S$494.4 million in the last financial year. These “were for drainage, used water reticulation network and the Active Beautiful Clean Waters Programme projects belonging to the Government.”

Some have also questioned the increasing Operating Expenses which stood at $1.23 billion, compared to the $1.19 billion the previous year.

The PUB’s Annual Report explains that the difference “was due mainly to higher manpower costs, increased in depreciation expenses, maintenance expenses and research and development expenses.”

The minister of the MEWR, Masagos Zulkifli, had also earlier cited rising costs as a reason for the hike in water prices.

“Rising costs of resources and the use of more complex development approaches have exerted upward pressure on the costs of producing and delivering water,” he wrote.

The “cost of water transmission has increased as Singapore lays deeper pipes in an urbanised environment”, reports the Straits Times.

The Finance Minister, Heng Swee Keat, had said that the increase “will fund the higher costs of desalination and Newater production, as well as that of maintaining Singapore’s current water infrastructure”, as reported by the newspaper.

“PUB expended S$319.9 million (prior year: S$222.3 million) in capital expenditure as part of our continual efforts to replace, improve and expand water and used water infrastructure to cater for future water needs of the nation,” the PUB’s Report says.

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