PUB issues termination notice to Tuaspring

It provides a 30-day notice period before the plant takeover.

The Public Utilities Board (PUB) has issued a notice to Hyflux subsidiary, Tuaspring, that will terminate the Water Purchase Agreement (WPA) and take over the desalination plant.

The termination notice provides a 30-day notice period before the water agency takes over Tuaspring, according to a statement from the agency.  

Also read: Hyflux troubles trickle down as nearly $4b corporate bonds mature by end-2019

PUB gave Tuaspring until 30 April to remedy defaults related to the WPA entered into between by the water agency and Tuaspring in 2011. Under the deal, Tuaspring must deliver up to 70 million gallons of desalinated water per day to PUB from 2013-2038. However, PUB said in a statement that Tuaspring has failed to keep the plant ‘reliably operational’ to meet contractual obligations.

“Though not stated in the Termination Notice, as clarified by PUB in their letter of 21 March 2019 to Tuaspring and the 21 March Announcement, PUB has previously expressed that it would be willing to waive the compensation sum likely to be payable by Tuaspring to PUB under the WPA,” Hyflux said in a statement.

The termination of the WPA deals another heavy blow to debt-ridden water treatment firm which earlier reported $916m impairment loss due to the assessment of the carrying value of Tuaspring and other projects to book a net loss of $1.1b.

In October, Hyflux managed to find a white knight in SM Investments who pledged to invest $530m in exchange for a 60% stake but the relationship turned sour in March after the Indonesian consortium warned it could abandon the deal after the initial default notice from PUB, which culminated in Hyflux terminating the restructuring agreement and suing its would-be white knight in April.