by Tan Kin Lian
No bail out for Hyflux
It is easy for people to mutter the words, “the govt should not use tax payers money to bail out Hyflux”. Even the highly paid Minister for the Environment and Water Resources muttered these words.
As an intelligent minister, I would expect him to spend some time to understand the part that his own agency, the Public Utilities Board, played in the saga. It was the tender condition – to quote a price with no adjustment for the future cost of power, that probably prompted Hyflux to enter into the power market. Was he aware that Public Utilities Board (PUB) asked the price to be fixed for a concession period of 25 years?
He should also consider this point – why did the PUB offer the tender to Hyflux when they have seriously under-quoted the price of water, i.e. 35 cents per cu meter when the next lowest tender was 52 cents and other tenders were at $1.00?
I know that the board and management of Hyflux should take the blame for their bad commercial decision and mistake in under-quoting the price.
Still, it it the role of the Public Utilities Board to give a poison pill to Hyflux so that they can be destroyed?
It may be a little more troublesome for him to understand the role played by another agency, i.e. the Energy market Authority. in this saga, especially as it comes under another ministry. But because so many people are badly affected, he should take the trouble before muttering the convenient words.
Is the minister aware that the Energy Market Authority had given out “vesting contracts” to new power generating companies to bring additional electricity supply into the market way beyond the actual demand?
It is this additional supply that depressed the wholesale electricity price from $125 in 2011 (when the tender was awarded to Hyflux) to $63 in 2016, when the Hyflux power plant came into operation.
Because the honorable minister said “no bail out”, many other people just follow and shout “no bail out”.
It does not seem to be a fair way of dealing with the losses of 34,000 investors who put in $900 million of their hard earned savings.