Opening Speech at the Second Reading of the Public Utilities (Amendment) Bill - Masagos Zulkifli

Opening Speech by Mr Masagos Zulkifli, Minister for the Environment and Water Resources, at the Second Reading of the Public Utilities (Amendment) Bill on Friday, 6 March 2020

1 Mr Speaker, Sir, I beg to move, "That the Bill be now read a second time."

INTENT

2 The Public Utilities Act was last amended in February 2018. Since then, the work of PUB has continued to evolve. First, as I had announced during my COS speech a few days ago, PUB will be given an expanded mandate to defend our coasts against rising sea levels. Second, as PUB continues to diversify Singapore’s water sources, the number of desalination and NEWater plants has increased. There will be ten such plants by the end of this year, up from seven in February 2018. Third, PUB continues to leverage technology to improve service quality. As announced in January this year, PUB will roll out some 300,000 smart water meters in homes and commercial and industrial buildings by 2023. Lastly, to complement PUB’s efforts in ensuring the security of our water supply, we will also need building owners and managers to do their part to keep our water supply system secure, by protecting their water tanks against unauthorised access.

3 Against the backdrop of these developments, it is necessary to update the Public Utilities Act in four key areas to ensure that it remains effective and relevant. Let me go through each group of amendments in turn.

AMENDMENT #1: CONFER NEW COASTAL PROTECTION FUNCTIONS AND ESTABLISH THE COASTAL AND FLOOD PROTECTION FUND

4 The first group of amendments will expressly confer new coastal protection functions on PUB, and legislate the new Coastal and Flood Protection Fund.

5 PUB is currently the national authority for drainage and inland flood protection. Given the synergy in tackling inland flooding and coastal inundation risks together in a holistic manner, the Government has tasked PUB to be the national Coastal Protection Agency. PUB will work with agencies and other stakeholders to enhance our coastline defences, and coordinate policies to facilitate decisions on land-use, development and activities to safeguard Singapore against rising sea levels.

6 To provide for the substantial capital outlay and implement coastal and flood protection in a fiscally sustainable manner, DPM announced in his Budget Speech that a Coastal and Flood Protection Fund will be set up within PUB, with an initial injection of $5 billion from the Government’s FY2020 Budget.

7 We will use this fund prudently to implement coastal protection measures, which could include sea walls, tidal gates and pumping stations. These are all being studied, and may need to be deployed together to prevent flooding. The Fund will also be used to help PUB expand Singapore’s drainage infrastructure to cope with more intense rainfall arising from climate change.

8 The Coastal and Flood Protection Fund signals the Government’s resolve in tackling long-term existential challenges such as climate change. PM mentioned at the National Day Rally last year that climate change adaptation might cost $100 billion or more over the next 100 years. Given the significant outlay, we will need a combination of funding methods to finance our adaptation measures. The Coastal and Flood Protection Fund will be just one source of funding. We will study this closely and assess what other appropriate funding sources should be used. These sources may include budgets of Ministries, borrowing, and tapping on Past Reserves where land reclamation is involved. Climate change defence is existential for Singapore. PM also said in his National Day Rally speech, that everything else must bend at the knees to safeguard the existence of our island nation. Planning and investing long-term for coastal defences and national flood protection will be critical to ensure that Singapore has adequate resources to meet this challenge.

AMENDMENT #2: LEGISLATIVE SAFEGUARDS OVER DBOO PLANTS

9 The second group of amendments will provide for legislative safeguards over our water infrastructure, especially water supply plants. As the House is aware, we have been diversifying our water sources by building up our four national taps over the decades. The intent is to safeguard our water security.

10 As we build up our desalination and NEWater capacity, PUB has partnered the private sector to design, build, own, and operate some of our desalination and NEWater plants. This DBOO model allows PUB to tap on the expertise and resources of the private sector to deliver water solutions more cost-effectively.

11 By the end of this year, PUB will have six out of ten desalination and NEWater plants under the DBOO model. The remaining four plants are owned and operated by PUB.

ROBUST CONTRACTUAL SAFEGUARDS ARE IN PLACE

12 For the DBOO plants, PUB has put in place robust contractual safeguards to ensure water security. For example, concession companies that own and operate DBOO plants are obliged to seek PUB’s approval when there is a change in control. Under the contractual terms, PUB can terminate the contracts and buy over the plants, or in some cases, step in to operate the plants, should the need arise. We have successfully executed some of these contractual remedies in the past to ensure our water security.

LEGISLATIVE SAFEGUARDS REQUIRED

13 Water security is critical to Singapore’s national security. While we have already strong contractual safeguards, given that water security is an existential issue to Singapore, we need to always look for ways to strengthen safeguards over our water infrastructure. We have reviewed the regulatory regimes of other critical infrastructure, such as electricity and telecommunications, and concluded that it would be prudent to adopt similar legislative safeguards that are already in place in these sectors.**

14 Taking reference from these other legislation, the Bill will strengthen PUB’s oversight of the concession companies. These concession companies, as well as any underlying trusts or business trusts that may be set up to hold the plant assets, will be designated by PUB and be subject to additional oversight mechanisms under the Bill.

15 Broadly, under Clause 8, all designated parties will be subject to three types of oversight controls. First, a person who becomes a substantial controller or indirect controller of the designated parties that own and operate the DBOO plants will need to notify or seek approval from PUB. This is to ensure that control of DBOO plants rests with individuals or groups whose interests are aligned with the long-term interests of Singapore’s water security and the public interest. For example, we may need to ensure that there is sufficient diversity in the ownership and operation of DBOO plants in Singapore. This will reduce the risk to Singapore’s water security from having mega conglomerates monopolising our critical infrastructure but then unexpectedly collapsing. Given the strategic role that DBOO plants play in Singapore’s water security, PUB must maintain oversight of controllers who directly or indirectly control substantial equity interest and/or voting power in these designated parties.

16 Second, these designated parties cannot be dissolved, terminated or wound up voluntarily without PUB’s consent. The dissolution, termination or winding up of these designated parties will adversely affect our water security. If there are court proceedings for the dissolution, termination or winding up of these designated parties, PUB will be a party to such proceedings, and the court must consider representations made by PUB in such proceedings. This ensures that the court does not make any decision without having considered water security considerations. In addition, the creditors of these designated parties cannot enforce security over the property of such parties, or enforce any court order against such parties, without giving prior notice to PUB.

17 Third, the Minister will be empowered to issue Special Administration Orders, or SAOs. An SAO is an order of the Minister directing the takeover of control of the affairs, business and property of a designated party by another person, so as to ensure the continued operations of the DBOO plant for the public interest.

18 Mr Speaker, Sir, we are mindful that while such powers are similarly found in the other legislation I referenced earlier, concession companies may have some concerns over these powers. I would like to assure Members that these levers will not be exercised lightly and the Bill has limited their use to exceptional circumstances, such as when Singapore’s water security is under threat. As far as possible, PUB will continue to rely on existing contractual safeguards where appropriate, which have served PUB well thus far. But as I mentioned earlier, when it comes to water security, we take no chances.

AMENDMENT #3: SUPPORT IMPLEMENTATION OF ADVANCED METERING INFRASTRUCTURE

19 The third group of amendments relate to smart water meters. Clauses 2, 5, 6, 7 and 11 will update the Public Utilities Act to extend existing powers of PUB in relation to water meter installation, maintenance and enforcement to cover smart water meters.

20 These powers will support PUB’s Smart Water Meter Programme, the first phase of which involves the deployment of some 300,000 meters, starting from next year, in new and existing residential, commercial and industrial premises. This will allow PUB to leverage digital technologies to encourage behavioural change towards water conservation, optimise water demand management, and achieve greater operational efficiencies.

21 The updated provisions would empower PUB to: first, install smart water meters, including ancillary equipment; second, enter premises at reasonable hours or at such other time as may be agreed with the owner or occupier of the premise to carry out inspection or works on smart water meters; third, direct the owner to remove any object that hinders or obstructs access to a smart water meter; and fourth, take action against any person who interferes, interrupts or obstructs with the operation of a smart water meter supplied by PUB. In addition, the amendments specify the circumstances under which a person would be presumed to have tampered with a smart water meter and thus committed an offence.

AMENDMENT #4: RAISE MAXIMUM PENALTY FOR OFFENCES RELATING TO WATER TANK SECURITY

22 The last group of amendments relate to water tank security. While PUB had made great efforts to protect its water infrastructure and ensure that potable water supplied to consumers is safe and fit for drinking, building owners and managing agents also have a part to play in ensuring our water remains safe for drinking. For example, they need to take the necessary steps to prevent unauthorised access to the water tanks in their buildings, as these intrusions may disrupt or contaminate the water supply to customers.

23 Currently, a lapse in water tank security, such as failing to lock the water tank access door, is already an offence under the Public Utilities (Water Supply) Regulations. The offence carries a maximum penalty amount of $10,000, or imprisonment of up to 12 months, or both. PUB can offer to compound the offence by collecting a sum not exceeding $3,000.

24 Clause 10 introduces a new Section 45A to provide increased deterrence and enhance the security of water tanks by raising the maximum penalty amount for such offences to a fine of $50,000, or imprisonment of up to 12 months, or both. This is in line with the maximum penalty amount for causing contamination to the water supply by PUB, or interfering with or disrupting PUB’s water supply. In addition, the maximum composition sum for such offences will also be increased from $3,000 to $10,000.

25 The increased penalties will serve to remind building owners and management teams to take water tank security seriously. The vast majority of the building owners and management teams are diligent in ensuring water tank security and need not be concerned by the change.

CONCLUSION

26 Mr Speaker, in summary, PUB’s work continues to evolve. As PUB takes on a new role to defend our coasts, it also continues to diversify our water sources, digitalise its operations, and enhance water security. The proposed amendments to the Public Utilities Act that I have elaborated on in my speech are necessary to ensure that the Public Utilities Act remains effective and relevant. Ultimately, these proposed amendments will allow PUB to continue to fulfil its mission of safeguarding our water security, and ensuring a safe and reliable supply of water for all.

27 Sir, I beg to move.