Photo of TuasSpring power plant from Hyflux’s website

Hyflux’s current financial rut is a consequence of “its own commercial decisions”, with the company having “full knowledge of the gas supply situation and electricity generation market” at the time it carried out such moves, according to Director of the Market Development and Surveillance Department at the Energy Market Authority Dorcas Tan.

In a reply to Leong Mun Wai’s letter, published on The Business Times on Wed (3 Mar), Ms Tan added that it was thus “incorrect for Mr Leong to claim that Hyflux’s financial problems were caused by “an unexpected domestic policy change”.

She noted that the Energy Market Authority (EMA) had “offered the Liquefied Natural Gas (LNG) vesting scheme to power generation companies (gencos) as a voluntary option to encourage the uptake of LNG” 10 years ago in 2009, and that the gencos had “opted into the scheme based on their own commercial considerations”.

Ms Tan said that Hyflux does not have any LNG vesting contracts, and had only “decided to build its power plant after the LNG vesting contracts were awarded to the other gencos”.

“When Hyflux made this decision, information on the plans by other gencos to increase their generation capacity was publicly available,” she stressed, adding that there is “no justification for EMA to “render relief” to Hyflux using public resources, as Mr Leong had suggested”.

“While EMA only offered up to 1.2 million tonnes per annum of LNG under vesting contracts, the gencos decided to buy more than twice as much LNG and build additional generation capacity,” Ms Tan observed, adding that “wholesale electricity prices were high” then.

“The subsequent increase in generation capacity led to a decline in wholesale electricity prices in recent years,” she added.

Hyflux’s financial downfall “not a typical business failure”, EMA “did not render relief” to protect firm from sour repercussions of vesting contracts: Leong Mun Wai

Previously in a letter published on BT on 26 Mar, Mr Leong suggested that Hyflux’s financial downfall “is not a typical business failure”, and that while “the responsibility of the management led by Olivia Lum cannot be denied” due to the decision to venture into power generation instead of sticking to its original water treatment business, Hyflux’s investments were also “severely damaged by an unexpected domestic policy change”.

He attributed Hyflux’s failure to “the collapse of the wholesale electricity price”, which he deemed to be “the direct result of the vesting contracts given to the other gencos in return for their support to sign long term take-or-pay gas supply contracts from the LNG terminal, itself another national project”.

“As a result of the vesting contracts, the existing gencos expanded capacity rapidly, resulting in a reserved margin of 80 per cent instead of the normal 30 per cent, hence precipitating the price collapse,” he wrote.

Mr Leong had subsequently claimed that the EMA “also did not render relief to Hyflux at an early stage to buffer it from the unintended results of the vesting contracts”.

“As drastic change on both the demand and supply sides are unforseen because local power consumption growth has been steady, there is no way for Hyflux or any financial analyst to have anticipated the collapse in the electricity price to about S$50 per MWh in 2016, when Hyflux’s power plant started to sell its output,” he opined.

Hyflux had earlier arranged meetings with with its creditors as a part of its financial restructuring process to have them approve the proposed scheme of returns.

The meeting was meant for the two classes of creditors: Firstly, unsecured creditors, including medium-term noteholders and 29 banks; secondly, holders of perpetual securities and preference shares.

However, it announced on Thursday that the key investment deal with Indonesian white knight SM Investments (SMI) is now off the table, and cancelled the meetings on Friday and Monday.

Hyflux, drowning in S$2.7 billion in liabilities as of the end of Sep, stands to lose out on a “$380 million rescue package” from Salim, which was offered “in exchange for a 60% stake” in the water treatment company.

With Salim cancelling the agreement, Hyflux may end up being liquidated, unless it is able to secure a new sponsor “before the end of a debt moratorium granted by the court” at the end of this month.

Updated to reflect cancellation of deal between SIM and Hyflux.

Subscribe
Notify of
0 Comments
Inline Feedbacks
View all comments
You May Also Like

83-year-old S’porean passenger of Royal Caribbean cruise ship does not have COVID-19 infection: MOH

It was earlier reported that an 83-year-old passenger of a Royal Caribbean…

Singapore: 14 days leave of absence enforced for students, eldercare and healthcare workers who visited China

In the wake of rising casualties from the Wuhan virus and over…

500充电站 提供扣税优惠 鼓励更多电动车上路

鼓励更多电动车上路,新加坡放眼到2020年全国境内将有500座新的充电站,形成最大的民用电动车充电网络。 新加坡能源集团总裁黄锦贤称,未来电动车使用者可以在各大购物中心、住宅区、商业中心、工业区和主要地点,使用充电站。 目前,现有的40座充电站仅供该公司内部使用。在500个充电站中,将有100座提供50千瓦直流电,只需30分钟就能充满。目前的充电器也只能达到7.4千瓦。 充电只需30分钟 这意味着该公司放眼提供更迅速的充电服务,原本需8小时把电动车电力充满,未来将缩短至30分钟。新加坡能源策略发展总监吴志强说,驾驶者其中一项主要投诉,就是车子要充电了却很难找到充电站。 同时,消费者将来可以透过手机应用程序,线上支付充电费,也能获得最临近充电站的实时讯息。至于收费模式,吴志强称将在推展前才另行公布。 新加坡能源也公开招标,征购电力强度需介于22千瓦至50千瓦的直流电和交流电充电器硬件,以及架设充电器的服务。 消费者关心价格和行驶成本 陆路交通管理局和能源市场管理局在2011年至2013年,曾进行推广电动车的初步测试,问卷调查结果显示,消费者较关心电动车的价格、私人和公共的充电设备,以及充电后续航能力、电池寿命、充电时间等考量。 据陆路交通局今年初数据,在新加坡上路的混合动力车(Hybrid)达到2万辆,比起2012年多处4倍。我国政府征收排碳税,购买混合动力车至少可获3万元扣税,也鼓励消费者逐渐转换购车倾向。 陆交局也宣布,将电动车的排碳指标减少20巴仙,至每瓦-小时0.4克二氧化碳,这显示政府希望通过政策鼓励民众多使用混合动力车或电动车,从而减少汽车的使用,减少对环境的污染。 比起数年前,电动车价格明显有所下降。例如一辆丰田卡罗拉Altis新车价为12万新元,电动车日产聆风在未扣税前达13万,在回扣排碳税后,则是11万新元。(消息来源:dollarandsense.sg)…

所有抵境航班乘客需测体温;从中国返新师生请假两周

卫生部宣布,本地机场体温检测,将在本月29日起扩大到包含所有入境航班,以及加强机场防范措施。 卫生部长颜金勇和国家发展部长兼财政部第二部长黄循财,共同领导的政府跨部门工作小组,今早(27日)召开记者会。我国旅游警示也进一步升级至,呼吁国人推迟所有往中国非必要行程。 当局也会密切留意从中国飞抵我国的航班,由医疗团队在登机桥观察是否有乘客出现不适症状、或曾到过相关地区的乘客,也会被带到医护站。移民关卡局亦将检查和确保来自湖北旅客身体状况良好,并收集联络资料,以期在必要时便于展开追踪工作。 另一方面,教育部与社会及家庭发展早宣布属下学府和幼儿园的师生从中国大陆返新之后,必须请假14天。 教育部也提醒家长,若发现孩童不适应立即就医,确保孩子康复才返校上课。29日开课也将进行每日体温测量,留意师生是否出现类似感冒针状。 本月23日,卫生部确认本地首起新型冠状病毒的确诊病例。确诊感染武汉肺炎的男子来自武汉;随后在26日凌晨发文确认现第四起武汉新型冠状病毒确诊病例。 截至26日,当局已发现累积92宗疑似病例,其中46宗经确诊对武汉新型冠状病毒呈阴性反应,迄今为止共四宗确诊病例。当局也确认115位曾于四宗病例近接触的人士,其中86人仍在我国,66名则已成功被隔离。当局仍持续联系多达20名人士。