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Govt won't bail out Hyflux: Minister

This article is more than 12 months old

Debt-laden water treatment company Hyflux and its subsidiary Tuaspring Pte Ltd will not be bailed out by the Government.

Environment and Water Resources Minister Masagos Zulkifli yesterday said in Parliament that while the Government can understand the concerns and anxieties of retail investors, it "cannot use taxpayers' money to help investors recoup their investment losses".

Responding to Mr Seah Kian Peng (Marine Parade GRC), Mr Masagos noted that as Maybank is the only secured creditor of Tuaspring, it will receive payments before all other general creditors, including national water agency PUB.

He also said that "investors in search of returns must understand that returns come with some risk".

Hyflux faces the prospect of selling its Tuaspring desalination plant to PUB for zero dollars if it fails to rectify defaults at the plant by April 30.

Mr Masagos said the plant's purchase price will be determined later by an independent valuer in accordance with a water purchase agreement. The price is negative based on current valuation, he added.

This means Tuaspring would have to pay PUB a compensation sum for taking over the plant.

But Mr Masagos made the point that PUB is unlikely to recover the compensation sum from Tuaspring, given its financial position.

The water agency has therefore said it is willing to waive the compensation sum and purchase the plant at zero dollars, he added.

Ms Lee Bee Wah (Nee Soon GRC) asked how the Government justifies "using taxpayers' money to take over negative value assets from Hyflux".

Mr Masagos replied that the Government could "stress Hyflux even further" but may not get anything at the end of the process.

"Therefore, we have made the decision that because we are likely not to get anything... we have decided not to claim for the compensation," he said.