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Mon 01 Apr 2019 – 14:59
The actions of the National Water Agency's PUB on the Hyflux Tuaspring desalination plant have not weakened the public-private partnership (PPP) model for critical infrastructure.
Nevertheless, the government can not use taxpayer money to help small investors recover their losses, said Minister of the Environment and Water Resources Masagos Zulkifli on Monday in Parliament.
Mr. Masagos reaffirmed that the PUB's decision of March 5 to serve a notice of default on Hyflux's subsidiary, Tuaspring Pte Ltd (TPL), was taken to ensure the safety of the water at Singapore, with the possible termination of its water purchase contract "in order to preserve essential assets, in safe hands and avoid uncertainties about the operation of the desalination plant".
Although the Tuaspring factory purchase price is probably negative, the minister also reiterated that the PUB was willing to forgo the compensation that would be owed to him and to resume the same. factory without any additional cost for Hyflux.
"Let me be clear, then. The action of PUB does not weaken TPL or Hyflux, and does not disadvantage those who have invested in Hyflux. In fact, it is rather favorable to TPL, "he said, adding that this arrangement" had a positive impact on the value of Hyflux and, therefore, on the value of Hyflux shares offered ".
"The current situation with Hyflux does not mean that we should reject the PPP model because our other PPP projects are working well," said Masagos, who described the model as "useful for allowing us to take advantage of private sector and profitability water services more effectively. "
"In order to ensure that water safety is never compromised, PUB has put in place guarantees under PPP contracts. Although PUB does not interfere with the commercial decisions made by the concession companies, it monitors the performance of the PPP factories in order to ensure that the concession companies can meet their contractual obligations to PUB.
"In case of problems, PUB will oblige the concession companies to rectify them, otherwise it will be able to exercise its rights to terminate PPP contracts and take control of the facilities.
"We do not exercise these rights of termination lightly, but we will not hesitate to do so when it will become necessary to preserve our safety in water."
Many MPs (MPs) on Monday raised questions about the Hyflux issue, which took about 20 minutes.
Among others, Seah Kian Peng (Marine Parade RCMP) asked about the impact of Hyflux's struggles on water supply and the extent of private sector involvement in this sector.
Lee Bee Wah (Nee Soon RCMP) asked how the minister justified the use of taxpayers' money for the takeover of Tuaspring, a negative valuation asset, from Hyflux.
In a supplementary question, Lim Wee Kiak (Sembawang RCMP) added: "We have essential assets, such as power and all that, which are operated privately. How do you monitor all of these assets to make sure that they are doing well financially until that happens?
"I was just wondering if anything could have been done, with hindsight, for this Hyflux affair."
Mr. Masagos noted that the government had the choice between claiming compensation from Hyflux and waiving its right to do so.
"We have two options. One is to assert our rights, to insist more on Hyflux by asserting this right, and in the whole process, we get nothing at the end of the process, "he said.
"And so we decided that because we would probably not withdraw anything from the claim for compensation, we decided not to claim compensation."
He added that when difficulties arise in Tuaspring or any other PPP project, "the right and responsible thing to do is that the PUB asks TPL to rectify it and not immediately issue a notice of default – in fact give them the necessary time. do it when these things happen. "
"Now, the PUB is in talks with TPL about its flaws by all of this, and has given it as much time as possible," Masagos said.
"Well, our duty is to ensure the safety of water and to take all the necessary measures within the framework of its contractual right, mainly to protect the security of Singapore's water. So we did that. "
Holders of Hyflux preferred shares and perpetual securities claim some $ 970 million from Singapore, while holders of medium-term securities require an additional $ 277.7 million.
Mr. Seah asked if the government could come to the rescue of these particular investors.
"Investors looking for returns need to understand that there are risks in returns," said Masagos to the House.
"We can understand the concerns and concerns of small investors and we are saddened by their plight, but the government can not use taxpayers' money to help investors recover their losses on investments, even if control of the Tuas plant generates a product.
"You have to remember that there is an order to who gets what first. In this case, Maybank will still receive TPL payments before all other general creditors, including PUB. "
Hyflux still owes Maybank about 518 million US dollars, which are guaranteed by the Tuaspring plant.
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