Singapore is studying new proposals by Malaysia on the touchy issue of the price of water sold to the island state, visiting Deputy Prime Minister Lee Hsien Loong said.

Lee, who began the second day of a four-day visit to Malaysia today, told reporters the proposals had been put forward by Prime Minister Mahathir Mohamad, but refused to give details.

"These are new proposals and we need some time to study them, the implications and what the meaning of the formula is," he said after meeting Mahathir yesterday.

The supply of water to Singapore, which lacks natural resources, is one of a number of issues that have caused tensions between the two neighbours.

Malaysia charges that it has been seriously underpaid for years and that the island state is delaying negotiations on a new pricing system.

Singapore last month denied both charges and said it was waiting for Malaysia to clearly set out its position so there would be a framework for officials to resume negotiations to settle details.

Overall package

Singapore obtains half of its daily water needs from Malaysia's neighbouring Johor state at three sen 1,000 gallons. Its two water agreements with Malaysia expire in 2011 and 2061.

Singapore said that in February last year it agreed to pay Malaysia 60 sen per thousand gallons, with the price to be adjusted for inflation every five years, in any new agreement.

It had also offered to pay 45 sen per thousand gallons under the current agreements, although it was not obliged to do so.

A Singapore foreign ministry spokesman said the prices should be seen in the context of an overall package under negotiation.

"The package includes, among other things, payments that Malaysia will receive for railway land in Singapore. The total amount of money that Malaysia will receive when other items in the package are factored in will be over RM1.5 billion ringgit," the spokesman said.