In Parliament: Govt will not use taxpayers’ money to bail out Hyflux investors

SINGAPORE — The Government cannot justify the use of taxpayer money to bail out retail investors who have been burnt by the financial woes of water treatment firm Hyflux, Environment and Water Resources Minister Masagos Zulkifli said. 

He was responding on Monday (April 1) to a question from Mr Seah Kian Peng, a Member of Parliament (MP) for Marine Parade Group Representation Constituency (GRC), who asked if the Government could help out Singaporeans who have invested in the company.

Mr Masagos said investors must understand that investments come with risks.

Even if national water agency PUB’s planned takeover of Hyflux’s beleaguered Tuaspring desalination plant were to result in financial proceeds, investors have to remember that there is an order in which debtors and shareholders will be paid, he added.

“In this case, Maybank will still receive payments from TPL (Tuaspring Pte Ltd) before all other creditors, including PUB.”

Maybank is the secured lender of TPL.

Furthermore, Mr Masagos said, the planned PUB takeover of the desalination plant benefits Hyflux, as it alleviates the firm’s financial pressures.

On Saturday (March 30), some 300 people held a protest at Hong Lim Park against Hyflux’s restructuring proposal.

Many were Hyflux retail investors, some of whom called on the PUB to compensate them for the takeover of the Tuaspring desalination plant.

PUB is planning to take over the plant at zero cost.

Mr Masagos pointed out that based on its current market valuation, the plant’s price is negative, which means that by right, TPL should have to pay PUB a compensation for the takeover. However, PUB is waiving the compensation sum.

He added that as the plant “has been and will likely continue to lose money for the next few years”, PUB would have to “incur costs to make good the plant”.

Nee Soon GRC MP Lee Bee Wah then asked Mr Masagos how the Government could justify using taxpayer money to buy over an asset that has negative value.

To that, Mr Masagos said that PUB decided not to claim the compensation sum as it was “likely not to get anything” even if it asserts its right to the compensation.

Workers' Party's chief and Aljunied GRC MP Pritam Singh asked if public safety was compromised at any point when Hyflux, due to its financial woes, was unable to replace poorly performing membranes at the Tuaspring plant promptly in early 2017, which had then affected the quality and quantity of water produced by the plant.

Mr Masagos replied: “PUB makes many, many tests in our water system to ensure water safety, including the one in TSDP (Tuaspring Desalination Plant). Therefore we are certain that water supplied to consumers is safe to drink.”