NEA overpaid project partner $0.53m, lapses also found in HTX, MPA, EDB: Auditor-General’s report

SINGAPORE – The National Environment Agency (NEA) overpaid a project partner by $0.53 million for the operation of a waste-to-energy plant from December 2021 to January 2025.

NEA did not check with the partner for an update of the project’s financial model, which would have included necessary adjustments to costs. It did so only when the Auditor-General’s Office (AGO) asked about it in August 2024.

This was noted in the AGO’s annual report released on Sept 9 that highlighted key lapses by various ministries and public agencies for the 2024 to 2025 financial year.

In a statement on Sept 9, NEA identified this project as the $1.95 billion TuasOne project that was originally awarded to a consortium led by Hyflux in 2015.

TuasOne was required to provide waste incineration services to NEA for a period of 25 years from 2021 to 2046. It had to submit a financial model incorporating the cost, funding, operating and technical assumptions.

When it learnt of the costs of certain items, such as the land lease premium and grid connection in 2018, it was supposed to update the financial model within 30 days, said AGO in its report. But it did not do so, until the AGO’s query in 2024.

NEA acknowledged that the financial model was not updated with the correct parameters, and that it should have exercised greater due diligence.

It said TuasOne had since reviewed and updated its financial model, which was separately verified by an independent auditor. NEA will recover the $0.53 million overpayment from TuasOne, it added.

NEA said it has enhanced its processes and team overseeing public-private partnership projects, including ensuring that more complex issues relating to such contracts are adequately supported by in-house or professional legal and finance expertise.

It has also conducted checks across other such project agreements to ensure that there are no similar lapses. 

The AGO report said that in 2022, NEA had consented to TuasOne’s restructuring on the premise that there would be no increase in payment arising from its change in shareholding. However, the AGO estimated that NEA would be paying $8.09 million more post-restructuring.

In response, NEA said the restructuring was critical to ensuring the continued operations of the plant. Prior to this, the project had experienced significant challenges, including Hyflux’s insolvency in 2018, which led to a construction delay of 31 months and significant cost overruns. The project was eventually completed in end-2021.

NEA said that when it consented to the restructuring, both parties had relied on an outdated financial model.

Its external financial consultant has since assessed that the post-restructuring payments are reasonable and justified, it added.

AGO’s report said that with the eventual update of the financial model, NEA estimated that it would pay $1.73 million less for the remaining contract period from February 2025 onwards.

As part of the restructuring, the then-minority owner had to inject additional equity and accepted a “significantly reduced” project equity rate of return that was below typical market expectations, NEA said.

“Had the cost increases due to the construction delay and restructuring been fully passed on to NEA, the payments post-restructuring would have been significantly higher,” it said.

The AGO report also found lapses among other entities:

Home Team Science and Technology Agency (HTX)

HTX appointed a contractor to renovate its office space for $13.01 million, and a consultant to manage this project. HTX later ordered 87 contract variations totalling $0.71 million.

The AGO’s checks on 16 of the variations totalling $0.60 million found lapses in their management. It found three instances where works on variations totalling $0.31 million began without consent from the approving authority. In addition, the cost estimates were provided to HTX only after the work began.

There was also inadequate assurance that reasonable prices were charged to HTX for items whose rates were not listed in the contract. The AGO found 14 such items worth $0.28 million in five contract variations where the consultant did not follow procedures when assessing the cost reasonableness of the items.

Other weaknesses identified included no proper verification of a contractor’s claims before making payment, and delay in action taken to terminate a contract with a contractor which failed to fulfil its obligations.

The AGO said there was inadequate assurance that payments were made for services done and that public funds were well spent on this project. Although HTX had appointed a consultant to manage the renovation, HTX remained overall responsible, it added.

HTX said it would rectify the lapses and weaknesses, improve its contract management process and document all key decisions and assessments made.

Maritime and Port Authority of Singapore (MPA)

The AGO checked five tenders called by MPA and found two instances of errors in evaluation scoring of a tender for vessel management services.

One error could have affected the award of the tender worth $30.75 million for vessel management services for patrol craft, noted AGO.

In evaluating the tender, MPA used a method that assigned weightages to different criteria, and the highest scorer would be awarded the tender.

The AGO found that the successful tenderer had submitted certificates awarded to its subsidiary, not itself, as documentation of its quality management system. It was then awarded four points as part of the tender evaluation by MPA. This was not in line with the evaluation criteria and the points should not have been given.

Without the four points, another tenderer would have had the highest score.

It had also submitted a $2.43 million lower bid price.

The AGO also checked 37 payments – totalling $5.95 million – under seven contracts. It noted that for 18 payments totalling $1.27 million under six contracts, inadequate checks were made to ensure that payments made were correct and were for services listed in the contracts.

MPA said it has since updated its evaluation protocols and put in place measures to ensure proper checks and verification of supporting documentation are done before future payments are approved.

The AGO also found that MPA had collected $115.88 million in dumping and monitoring fees for the financial years from 2020 to 2023, as well as $0.70 million in two port dues concessions from January 2021 to March 2024. These fees and concessions had been imposed for decades, MPA said.

Such fees and concessions should be prescribed in legislation, noted the AGO. MPA said it would amend legislation for the dumping and monitoring fees, and prescribe the port dues concessions in legislation if they are continued.

Economic Development Board (EDB)

The AGO’s checks of 15 grant disbursements totalling $73,900 between April 1, 2021, and March 31, 2024, under the Singapore Global Network Funding Programme found lapses in the administration, and weaknesses in the design, of the programme.

The programme funds ground-up events to help grow and strengthen Singapore’s global network of family and friends. The events engage overseas Singaporeans and non-Singaporeans who have studied, worked and lived in Singapore.

During the audit period, $1.6 million was reimbursed to 370 applicants for 605 applications.

Of the 15 disbursements it looked at, AGO found no evidence that EDB had checked on the funding eligibility. It added that applicants were not required to declare any conflict of interest when submitting their claims.

EDB said it has since tightened its reimbursement framework with additional checks. It did not elaborate on what these checks are.

Separately, the AGO also checked five procurements made by EDB during the same period and found a lack of robustness in tender evaluation and award of contract for global media agency services.

As part of each tender proposal, tenderers had to quote retainer fees, as well as submit remuneration data for any job roles specified.

AGO found that the awarded tenderer submitted the remuneration data only after the tender closed. The tenderer originally quoted a total retainer fee of $9.45 million, but the retainer fee derived later using the remuneration data was $11.54 million.

EDB accepted the remuneration data submitted after the close of tender without clarifying the discrepancy.

EDB said it has taken immediate steps to rectify lapses flagged by the AGO, and will step up efforts to strengthen its workflow and systems.