PUB takes over Tuaspring desalination plant from Hyflux

National water agency PUB says that the takeover of the Tuaspring desalination plant from Hyflux is to safeguard Singapore's water security.
National water agency PUB says that the takeover of the Tuaspring desalination plant from Hyflux is to safeguard Singapore's water security.ST FILE PHOTO

As of today, national water agency PUB has taken over the Tuaspring desalination plant from troubled water treatment firm Hyflux.

The transfer came after the water purchase agreement with Tuaspring was terminated yesterday.

PUB confirmed the move in a statement at midnight, adding that the move was to safeguard Singapore's water security.

It had issued Tuaspring a notice last month to take over ownership of the desalination plant for zero dollars and at zero cost to Hyflux.

PUB also said then that it will keep employees with the relevant operational capabilities to run the desalination plant, and that it would facilitate a smooth transition.

The desalination facility is part of the Tuaspring Integrated Water and Power Plant that cost Hyflux $1.05 billion.

Profits from the power plant were meant to subsidise the desalination plant's running costs, but lower electricity prices and operating losses from desalination operations sent Hyflux into debt.

The firm filed for court protection to reorganise its debts last May.

It had borrowings of $2.95 billion as of March 31 last year.

On Thursday, United Arab Emirates utilities group Utico said it had asked PUB to delay the takeover as the firm was hoping to enter a deal with Hyflux to fix the operational and financial defaults at Tuaspring that Hyflux had failed to rectify.

The defaults, coupled with a failed $530 million rescue deal by Indonesian consortium SM Investments, resulted in PUB stepping in.

Utico has offered to invest $400 million in Hyflux.

Hyflux is also in talks with Mauritius-based multi-strategy investment firm Oyster Bay Fund, which could invest up to $500 million.

A third suitor, said by Hyflux to be one of the world's top 10 biggest desalination firms, has shown interest in acquiring certain Hyflux assets in the Middle East and North Africa.

Tuaspring is one of Singapore's three desalination plants, which have a combined capacity of 130 million gallons of water a day.

One of the other plants, SingSpring, was also built by Hyflux. The other is run by PUB.

Two more desalination plants will be ready by next year.

Desalinated water is expected to meet up to 30 per cent of Singapore's future water needs by 2060.

A version of this article appeared in the print edition of The Straits Times on May 18, 2019, with the headline 'PUB takes over Tuaspring desalination plant from Hyflux'. Print Edition | Subscribe