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PUB monitoring Hyflux's other plants and will step in if they default

PUB has given Hyflux's subsidiary Tuaspring Private Limited (TPL) 30 days to remedy defaults that have arisen under a water purchase agreement signed in 2011.
PUB has given Hyflux's subsidiary Tuaspring Private Limited (TPL) 30 days to remedy defaults that have arisen under a water purchase agreement signed in 2011.PHOTO: ST FILE

National water agency PUB has been monitoring Hyflux's other facilities in addition to the Tuaspring water and power plant, and will invoke the same step-in rights if they should also default, Environment and Water Resources Minister Masagos Zulkifli said yesterday.

Mr Masagos was responding in Parliament yesterday to Workers' Party Non-Constituency MP Daniel Goh's questions on whether Hyflux's financial and operational woes will affect the SingSpring desalination plant, the Bedok Newater plant and the membrane bioreactor plant in Jurong, and in turn the water supply.

Mr Masagos told MPs: "PUB has been on site in all the plants. We have been monitoring, we always monitor... If they should default, the same step-in rights can be invoked."

He also addressed the issue of how viable public-private partnership (PPP) projects are, given Hyflux's failure.

"In adopting the PPP model, we get many advantages. We are able to not invest in capital, pay only for what we need. We also can build local capabilities of our enterprises," said Mr Masagos.

"But at the same time, we also know there are risks involved and therefore we have put enough measures to be able to take over the plant only in the event that these PPP partners are not viable any more. And this is exactly what we are doing now where (Tuaspring) is concerned."

PUB has given Hyflux's subsidiary Tuaspring Private Limited (TPL) 30 days to remedy defaults that have arisen under a water purchase agreement signed in 2011.

 
 
 
 

TPL has been unable to fulfil various contractual obligations under the agreement, in particular by failing to keep the plant reliably operational. It has also been unable to produce financial evidence to demonstrate its ability to keep the plant running for the next six months.

PUB said it will exercise its right to end the agreement and take control of the Tuaspring plant if the defaults are not resolved by April 5.

It told The Straits Times: "The water purchase agreement provides for PUB to take over the integrated plant as whole, or the desalination plant alone."

Ms Lee Bee Wah (Nee Soon GRC) asked Mr Masagos in Parliament yesterday to elaborate on this and whether Tuaspring's defaults will affect Singapore's drinking water supply and water security.

Mr Masagos replied: "We are not privy to what is happening to the company because (it) is of course exposed to many other factors that may affect its performance."

He earlier said: "PUB has decided to exercise its rights under its contract with TPL and initiate the necessary proceedings to... safeguard our water security.

"We saw how the Linggiu Reservoir stock level plummeted to 20 per cent in 2016. It has yet to recover fully.

"That is why our weather-resilient Newater and desalination taps are integral to our water security," he added.

 
A version of this article appeared in the print edition of The Straits Times on March 08, 2019, with the headline 'PUB monitoring Hyflux's other plants and will step in if they default'. Print Edition | Subscribe