Singapore—In Parliament on Monday, April 1, Environment and Water Resources Minister Masagos Zulkifli announced that taxpayers’ money cannot be used to make up for the losses of beleaguered water treatment company Hyflux. In other words, there will be no Government bailout for the debt-ridden firm or its subsidiary Tuaspring Pte Ltd (TPL).
Mr Masagos said that the Government is aware of the plight of Hyflux’s retail investors, however, it “cannot use taxpayers’ money to help investors recoup their investment losses,” though it is “saddened by their plight”.
The Environment and Water Resources Minister also noted that as Tuaspring’s only secured creditor, Maybank will be receiving payments ahead of all of the company’s other creditors, even PUB, Singapore’s water agency.
He highlighted the inherent risk that comes with investing. “Investors in search of returns must understand that returns come with some risk,” he said.
Mr Masagos also said in Parliament that should Hyflux fail to rectify its defaults by the end of April, the Tuaspring desalination plant could be sold to PUB for zero dollars.
This price is based on the current valuation, but later, he said, its purchase price will be made by an an independent valuer in accordance with a water purchase agreement.
As things stand, Tusapring may still need to pay PUB for the takeover of the plant, but based on its current financial state, it may not be in a position to do so.
Therefore, PUB is open to buying the plant for zero dollars, and to forgo the fee for compensation. “Given TPL’s current financial position, PUB is unlikely to recover the compensation sum from TPL. PUB has therefore indicated that it is willing to waive the compensation sum and purchase the desalination plant at zero dollars.”
This prompted a question from MP Lee Bee Wah (Nee Soon GRC). She asked how the Government could justify “using taxpayers’ money to take over negative value assets from Hyflux”.
The Environment and Water Resources Minister answered that the Government may “stress Hyflux even further”, but still come up empty-handed.
“We have two options, one is to assert our rights … stress Hyflux even further by asserting that right, and in that whole process, may not get anything at the end of the process.
Therefore, we have made the decision that because we are likely not going to get anything from claiming the compensation, we have decided not to claim for that compensation.”
What PUB is doing, he said, will actually benefit Tuaspring, and will not weaken either the company or its investors. Tuaspring, he added, has failed to keep the plant in adequate operating condition, and in keeping up with its responsibilities as outlined in the water purchase agreement.
And of late, it has also not been able to prove that it can keep the plant running for the next half year.
Despite the grace period Tuaspring was given by PUB to address its issues, its problems have only increased, forcing the possible takeover and termination of the agreement.
He added, “This is to ensure that a critical asset remains in safe hands, and avoids uncertainty over the operations of the desalination plant.
Ultimately, PUB’s actions are based on our overriding objective of ensuring Singapore’s water security and that water continues to be reliably produced at the plant to meet the needs of Singapore and Singaporeans.”
Pritam Singh (Aljunied GRC), the head of the Workers’ Party, inquired as to whether the safety of the public was put at risk in 2017 when Hyflux was unable to replace membranes that were performing poorly. This had a negative effect on the quantity and quality of water output.
“Many, many tests in our water system to ensure water safety,” had been conducted by PUB, said Mr Masagos ensuring the safety of the water produced. -TISG