On Tuesday (5 March), the national water agency Public Utility Board sent a default notice to Tuaspring Pte Ltd (TPL), a subsidiary of Hyflux, to fix defaults arising under the Water Purchase Agreement (WPA) between PUB and TPL.
The authority announced that TPL is to resolve all defaults within the default notice period and failing to do so, will result to PUB terminating the WPA and take control of the plant.
It appears that TPL has not been able to keep up to various contractual obligations under the WPA, especially failing to keep the plant reliably operational as required. On top of that, TPL has also been unable to produce financial evidence to demonstrate its ability to keep the plant running for the next six months.
Responding to this event, retired banker Chris Kuan took his Facebook account on Wednesday (6 March) to raise a few questions on this matter.
He started his post by saying that this whole incident does not mean national water security is at risk and “Hyflux needs to be bailed out” but rather just PUB may be taking over the water facilities. This is because many people have been requesting the Government to help “bail out Hyflux on the issue of water security”.
However, he noted that although he feels sorry for Hyflux’s investors, but he wondered if the company is also “a victim of regulatory excesses like awarding too much contracts to ensure a peak reserve margin of 30% which eventually resulted in a 80% reserve margin, causing process to fall?”
He further questioned if the “consumers are actually subsidising the power companies when the wholesale prices fell below regulated prices since before deregulation, bulk buyers can buy at the former but consumers at the latter?”
On social media, netizens felt that PUB should take control of Hyflux as the company is a “mess”.
However, some questioned the need to use taxpayers’ money to “bill out a private company”.
But, Michelle Tan opined that Hyflux might be too ambitious with rapid overseas expansion which has now resulted in a huge problem for them.