SINGAPORE, March 5 (Reuters) - Singapore’s national water agency PUB said on Tuesday it might take control of a water treatment plant owned by Hyflux as the company had been unable to fulfil its contractual obligations.
Hyflux, which built two of Singapore’s desalination plants, is in the middle of a court-supervised reorganisation which began last year as the company tried to restructure its debt.
Tuaspring, a Hyflux subsidiary, is the largest desalination plant out of three in Singapore and an important water source for the city-state.
PUB said it issued a default notice to Tuaspring Pte Ltd to remedy defaults under their water purchase agreement.
“PUB is taking steps to ensure that our water security is safeguarded,” it said.
“PUB requires Tuaspring to fully resolve all defaults within the default notice period, failing which, upon the expiry of the default notice period, PUB will exercise its right to terminate the WPA (water purchase agreement) and take control of the plant,” it said in its statement.
According to a 2011 agreement, Hyflux was to deliver up to 70 million gallons of desalinated water a day to PUB over a 25-year period from 2013 to 2038.
Hyflux did not have an immediate comment.
PUB also said Tuaspring had failed to keep the plant reliably operational and had not been able to produce financial evidence to demonstrate its ability to keep the plant running for the next six months.
Hyflux said on Monday it had taken a S$916 million ($676.76 million) impairment charge for the nine months ended Sept. 30, 2018, relating to a loss while adjusting the carrying value of Tuaspring plant, and other write-downs. (Reporting by Aradhana Aravindan. Editing by Jane Merriman)