PUB, the national water agency of Singapore, stated that it will break off its water purchase agreement with Hyflux and take over Tuaspring plant if the company will fail to work out its defaults by April 5.
The water agency revealed this plan on Thursday, March 21, in an effort to protect Singapore's water supply security. PUB also consented to waive compensation that it is entitled to get from Hyflux and expressed willingness to buy the Tuaspring desalination the plant (TSDP) at zero dollars.
"PUB's role is to safeguard Singapore's water security. Singapore's desalination plants are integral to our water security," PUB stated via press release. "Current valuation is that the purchase price of the TSDP is negative, and TPL has to pay PUB a compensation sum under the WPA. However, PUB has informed TPL that it is willing to purchase the TSDP for zero dollars and waive the compensation sum.
According to Channel News Asia, the announcement was made after Tuaspring Pte Ltd. asked PUB on Wednesday, March 20, to make it clear if it will purchase just the Tuaspring desalination plant or the whole Hyflux Tuaspring Integrated Water and Power Plant if the water purchase agreement (WPA) is dismissed.
Under the WPA that was signed in 2011, Tuaspring is required to supply up to 70 million gallons of desalinated water to PUB everyday for 25 years. The period covered is from 2013 to 2038. However, Tuaspring failed to maintain the plant and issues arose in 2017.
Hyflux's subsidiary was not able to keep the plant in good condition so the quality and quantity of the water that it treats were negatively affected. It was determined that Tuaspring was unable to promptly change the facility's worn-out membranes that were already functioning very poorly so the water produced is not in top shape.
In any case, PUB also mentioned in the media release that its Tuaspring take over will also be beneficial to Hyflux as it will help ease the pressure to rest of the Hyflux group. This is because the company is already losing money so much money with operating the desalination plant.
"This will also increase the chances of Hyflux being successfully restructured. PUB's actions should therefore not be used as the basis for SMI's decision to withdraw from the RA," Today Online quoted PUB s saying in the release.
