Singapore — Securities Investors Association Singapore (SIAS) chief David Gerald has urged the Public Utilities Board (PUB) to consider the plight of the 50,000 Singaporeans who invested in the beleagured water treatment firm Hyflux and who now face great uncertainty, in an open letter sent to PUB CEO Ng Joo Hee on Tuesday (26 Mar).
SIAS is Singapore’s investor watchdog while PUB is the national water agency and a statutory board under the Ministry for Environment and Water Resources. Gerald volleyed 16 questions at PUB in the open letter regarding the government agency’s proposed takeover of the Tuaspring Desalination Plant, which is a subsidiary of Hyflux.
Earlier this month, the PUB had announced its takeover plans and had said that it had issued the default notice to Tuaspring for failing to keep its desalination plant “reliably operational” under a water purchase agreement, since the plant had begun facing operational issues in 2017 which affected the quality and quantity of the water it produced.
Asserting that an independent valuer had put Tuaspring’s purchase price in the negative — meaning that the water plant would have to pay compensation to PUB under the water purchase agreement, PUB had announced that it was willing to waive the compensation and instead buy the water plant for “zero dollars”.
PUB is set to exercise its right to terminate the water purchase agreement and take control of the water plant if Tuaspring does not resolve all defaults by Apr 5.
In his letter to PUB, SIAS chief Gerald asks how the purchase price of the plant had come to be “zero dollars” and argues that the price should match what it would cost to build an equivalent desalination plant.
Gerald also highlighted how PUB’s takeover plans could impact investors. In Oct 2018, Indonesian consortium SM Investments (which is made up of the Salim-Medco Groups) agreed to buy a 60 per cent stake in Hyflux as part of a rescue deal.
SM Investments, however, is considering backing out the deal after PUB announced its plans this month. Calling Salim-Medco a “white knight” and the only hope for the investors of Hyflux, Gerald questioned the timing of the default notice expiry in April especially since PUB had been aware of the Hyflux-Tuaspring situation since 2017.
He asked: “Couldn’t PUB have waited till the outcome of the restructuring, on how the default could be remedied?
“Could PUB have waited a little longer? Wouldn’t that be helpful to the plight of the 50,000 Singapore citizens, who have ploughed their money into Hyflux, to avoid further uncertainty?”
Earlier, SIAS had urged Hyflux to chase Salim-Medco for updates on the rescue deal in another open letter.
In his latest letter, Gerald asked PUB to give Tuaspring more time to resolve the defaults under the water price agreement. He also asked PUB to clarify whether it would acquire just the plant or the operation rights as well, if PUB goes ahead and takes over Tuaspring.
The SIAS head further asked PUB to clarify whether PUB intends to sell the plant or Tuaspring in the future, if it proceeds to exercise the default notice.
Meanwhile, some of the Hyflux investors are planning on staging a police-approved protest at the Speakers’ Corner at Hong Lim Park on Saturday (30 Mar) from 3-4 pm.
Many investors are unhappy with how things have turned out and have asked PUB to extend goodwill.