Lee Hsien Loong and Olivia Lum; Hyflux

The Securities Investors Association of Singapore (Sias) yesterday (Mar 26) did a States Times Review-style article questioning the Singapore government for its massive profits on the water sale:

“PUB buys water from TPL at $0.45/m³ and charges consumers from $2.74/m³, given that this was a P-P-P contract, couldn’t the price have been revised knowing that the company was incurring losses year after year?”

Read: Singapore government profit 472% off water sale

This is exactly the same question Malaysia is asking and the whole point about the water treaty dispute. The PUB’s obvious answer to SIAS’s question is of course: the government is profiting, and what can you do? Minister Vivian Balakrishnan will call you “dishonourable” and “corrupt” if you try to review the water contract.

Like any pro-government individual or organisation who has been sold short by the dictatorship, they will first go into a state of denial, clamouring for the government support and become befuddled losing their sense of reasoning. This letter by SIAS is a classic example.

SIAS, an investor representation association apparently, naively went on to ask PUB why Tuaspring has a “negative value” according to the PUB’s “independent” valuation:

“How is the purchase price of TSDP of $0 determined? Shouldn’t the purchase price be the equivalent replacement cost of building or an equivalent plant?”

This is absolute naivety. If PUB’s “independent valuer” can be trusted, you can trust Law Minister K Shanmugam’s Committee on Deliberate Online Falsehoods. In this instance, PUB conveniently factored in the yearly operating losses of the plant and made it sounded like a good deal adding the typical salesman line that “we are waiving compensation for the breach of the Water Purchase Agreement contract”.

PUB can valuate at zero dollar, and it doesn’t need to explain to you dear SIAS.

Besides, Tuaspring desalination and power plant bleeds about S$100 million a year. Putting a cash burner on a positive value and passing the tax dollars to Hyflux investors would spiral endless severe criticisms from yours truly States Times Review.

Please don’t get me wrong, I am not defending PUB. I am perfectly consistent: The Tuaspring plant is a bad deal to Singaporean taxpayers, the offer by PUB is a bad deal to Hyflux investors and keeping the plant for Hyflux is also a bad deal. It is a lose-lose-lose situation because Tuaspring plant is a bad project to begin with.

Desalinating water from the sea is not an invention from Hyflux or Singapore, despite what the state propaganda media says. There are aplenty of desalination plants in Australia and they don’t post exaggerating losses seen at Tuaspring plant. The power plant attached to the desalination should serve primarily as a battery for desalination purposes and not for electricity supply sale. This is a poor investment decision by Olivia Lum back in 2011 who were blinded by greed, and didn’t expect the oil price to crash and the government to open up the electricity retail market.

Lastly, SIAS asked if PUB is intimidating Hyflux’s buyer SMI:

“It was reported by BT on Friday, 22 March 2019 “HYFLUX’s reluctant white knight should not use PUB as an excuse to back out of its investment agreement with the water company, the national water agency said on Thursday.” Did PUB make this statement? If so why? Does PUB have any intimation from SMI to that effect?”

You’ve got this point right: PUB is indeed intimidating SMI. The Singapore government’s success is built by intimidation and threats, so what’s new?

Tuasplant is currently supplying 30% of the daily water supply in Singapore, as such, PUB will not sell it off after the acquisition. This also means Singaporean taxpayers will pay S$100 million every year in Hyflux’s place. However, this also provided PUB a convenient excuse to raise water prices – which was only just recently raised by 30% in 2018.

Hyflux investors can forget about getting a cent, the bondholders, who are also badly burnt, will swallow up every bit.

Hyflux looks like it will be shut down and liquidated, but there is still one winner to this fiasco: Olivia Lum. She still get to keep her millions she collected without any legal repercussions. After all, there are perks of being a friend of the Prime Minister’s wife in this corrupted Lee Hsien Loong dictatorship.

Alex Tan