SINGAPORE (AFP) updated version

- Singapore today rejected accusations that it was profiting by selling treated water back to Malaysia for more than it originally paid for the raw water.

"There have been some views expressed claiming that Singapore was profiteering by buying water at a cheap price and selling it at a much higher price," a foreign ministry spokesman said in a statement.

"This is a misrepresentation of facts," the spokesman added.

Malaysian Prime Minister Mahathir Mohamad last week said Singapore "had been getting the water from us for free" because Malaysia had been selling it cheaply to the city-state since 1960 and buying some of the treated water back at a much higher price.

In its statement, the foreign ministry said it cost the city-state RM2.40 to treat 1,000 gallons of water, but Johor pays only 50 sen per 1,000 gallons for the treated water it buys back from Singapore.

"Singapore is therefore absorbing the cost of treated water sold to Johor to the amount of RM1.90 per thousand gallons," the spokesman said.

"Johor in turn sells the treated water it has purchased from Singapore to its consumers at RM3.95 per thousand gallons."

Rates not reviewed

Singapore obtains half of its daily water needs from Johor, which neighbours the island nation, at three sen per 1,000 gallons. Its two water agreements with Malaysia expire in 2011 and 2061.

The Johor state government could have re-examined the charges in 1986 and 1987 when rates for raw water purchased by Singapore and treated water purchased by Johor were up for review.

"The Johor state government has chosen not to review the price of water sold to Singapore," said the spokesman.

"Instead, Johor currently purchases 37 million gallons per day (mgd) of treated water from Singapore, well above the 17 mgd of treated water which Singapore is obliged to sell Johor under the current water agreements," he said.

Mahathir and Singapore's Senior Minister Lee Kuan Yew met in Kuala Lumpur in September and announced that they had reached agreement on broad principles over water supplies, one of a number of issues which had created friction between the two neighbours.

The spokesman said Malaysia has yet to reply to a letter from Singapore written on Dec 10 seeking a clarification on the water issue as well as other bilateral issues.

Water underpaid

Meanwhile, Mahathir said that Malaysia's ties with Singapore will not be damaged by the dispute over the water supply agreement.

Asked if the price dispute over water supplied to Singapore would sour bilateral relations, Mahathir said: "I don't think so. Our relations can be okay but these things must be settled."

The premier said Malaysia had long been underpaid for water supplied to Singapore and now wanted a "reasonable price".

"What we know is that we have been charging them three sen per 1,000 gallons of raw water and we know also that countries like Hong Kong buy water from mainland China at RM8 per 1,000 gallons. Obviously, we are being underpaid," he said.

"The longer talks are prolonged, the more money Malaysia will lose."

Mahathir declined to reveal the exact price Malaysia was seeking but said: "If Singapore refuses to accept our request, which is not eight ringgit but a reasonable figure, that means we are losing money everyday."

The premier said he told Malaysian officials to meet their Singaporean counterparts to iron out the water supply dispute as well as other outstanding bilateral issues.

Mahathir and Singapore's Senior Minister Lee Kuan Yew met in Kuala Lumpur in September and announced that they had reached agreement on broad principles over water supplies, one of a number of issues which have created friction between the two neighbours.