Under The Angsana Tree: Singapore's Water Issues

Embattled Hyflux acquired by Indonesian groups who now control 25% of SG’s water needs

Embattled water treatment company Hyflux has been saved by Indonesia's Salim Group and Medco Group.

Under the deal, Hyflux is set to receive a S$530 million investment from the 2 Indonesian groups comprising S$400 million for the 60 per cent equity and a shareholder loan of S$130 million. In addition, Hyflux will also get a S$30 million loan as interim working capital until the proposed deal is completed. Hyflux announced this yesterday (18 Oct) in a stock exchange filing.

Hence, when the deal is completed, Hyflux will be controlled by the Indonesians with a majority stake of 60 per cent.

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Singapore's Struggling Hyflux Sells Majority Stake to Indonesian Groups

Loss-making Hyflux had been seeking strategic investors to raise funds even as it negotiated with other parties to sell its Singapore-based Tuaspring, its combined desalination and power plant, to help pay creditors. Malayan Banking is the project's main lender.

Hyflux's Group chief executive Olivia Lum, who founded the company in 1989 and has grown it into firm employing 2,300 people, said the new investment will enable Hyflux to tap into the Indonesian market. "Indonesia will be a big market for us," she told a news conference. She said Hyflux would not need to sell Tuaspring but she did not give details.

Hyflux has built two of Singapore's desalination plants that can meet up to 25% of the city-state's water needs. In the past few years, the company had expanded in the Middle East and Africa using debt to fund its growth.

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Singapore's water success story to be repeated with energy: Chan Chun Sing

Minister for Trade & Industry Chan Chun Sing speaking at the press conference for the MOU signing between Asean and the International Renewable Energy Association, at the 36th Asean Ministers on Energy Meeting, on Oct 29, 2018. ST FOTO: GAVIN FOO

If the past 50 years have been about how Singapore has overcome water scarcity, the next 50 will be about how the country overcomes its energy challenges.

“Just like how Singapore has successfully diversified our supply of water over the years, our next ambitious goal is to enhance our energy resilience to ensure that we are never dependent on any single source of supply,” said Minister for Trade and Industry Chan Chun Sing on Tuesday (Oct 30) at the opening of Singapore International Energy Week at Marina Bay Sands.

To this end, the country is investing in infrastructure, tapping green energy & acting as a test-bed for innovative solutions here and abroad.

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Cash For Hyflux Water Business Runs Dry

Things have dried up for Lum’s Hyflux since she was on our cover in 2005. (Photo: The Straits Times, Singapore Press Holdings Ltd)

In 2005, Olivia Lum debuted on the list of Southeast Asia's 40 wealthiest. The founder of water-treatment firm Hyflux saw her fortune surge to $460 million in 2011, a year in which she also became the first woman to receive Ernst & Young's World Entrepreneur Award. A year later, the self-made Lum featured on Forbes Asia 's inaugural list of Asia's 50 Power Businesswomen.

Today Lum is struggling with shocked investors after Hyflux sought and won court protection in May to tackle mounting debts and reorganize its business, which now includes power generation. For 2017, the company reported its first-ever annual loss, amounting to $85 million, with further losses in the first quarter of 2018. Total liabilities, including bank debt, are $2.1 billion.

Lum, 57, who fell from the ranks of the 50 richest in 2013, blames the losses on an oversupply of gas that depressed Singapore electricity prices, creating a liquidity crunch with a knock-on hit to the firm's overall cash position. Lum has sought to sell the firm's landmark Tuaspring plant, Asia's first integrated water-and-power project, which supplies power for desalination as well as the electricity grid and remains in the red. Also dragging on the bottom line is its unsold Tianjin Dagang desalination plant in China.

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Embattled Hyflux stays afloat with $530m investment from Indonesian consortium

It is made up of Salim Group and Medco Group

A consortium called SM Investments composed of Indonesian-based conglomerate Salim Group & energy firm Medco Group has agreed to pump $530m into troubled water treatment firm Hyflux via private placement, according to a filing with the SGX.

The consortium was a result of a competitive bidding process where Hyflux initially entered into non-disclosure agreements with 16 potential interested parties.

As part of the restructuring agreement, SM Investments will subscribe for ordinary shares representing 60% of enlarged issue share capital for $400m & extend Hyflux a shareholder’s loan of a principal amount of $130m. It will also grant a loan of a principal amount of $30m to supply the company’s initial working capital requirements.

related: What will Hyflux do during its 6-month lawsuit protection?

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Indonesian white knights put S$530m Hyflux rescue plan on table

A new chapter: Ms Lum, seen here with Salim boss Anthony Salim, said: "Today is a happy day... Subsequently, we will have a lot of things to do." BT FOTO

A CONSORTIUM comprising 2 major Indonesian groups - conglomerate Salim Group and energy giant Medco Group - has agreed to give Hyflux a S$400 million equity injection, in exchange for a 60% stake in the water treatment firm once it has settled all its debts.

The consortium, SM Investments, will also grant Hyflux a shareholder's loan of S$130 million and a debtor-in-possession loan of S$30 million to help finance it through the restructuring.

With this offer on the table, it falls to Hyflux to negotiate terms of a debt restructuring with each of its creditor groups, which could include debt-for-equity swaps.

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Singapore's struggling Hyflux to sell majority stake to Indonesian groups

Singapore water treatment firm Hyflux Ltd, which is in the midst of a court-supervised reorganisation, said Indonesia’s Salim Group and Medco Group had agreed to acquire 60 percent of the company for S$400 million ($290 million), a move that gives it a lifeline for its struggling business.

The new joint venture called SM Investments Pte Ltd has also agreed to give Hyflux a loan of S$130 million, Hyflux and the two Indonesian firms said in a joint statement on Thursday.

“The investor was identified by the company through a competitive bidding process undertaken by the company as part of its restructuring plans,” Hyflux said, adding that the investors would also give it a S$30 million loan ahead of the proposed equity investment to meet its working capital requirements.

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Has Singapore's insolvency bill come a little too late for Hyflux?

It gives cash-strapped companies greater opportunity to restructure

An alarming number of high-profile corporate insolvencies has rocked Singapore over the past few months. First came a spate of beleaguered offshore and marine players hurt by a prolonged industry downturn; then came homegrown water treatment firm Hyflux, which filed for court-supervised debt restructuring in May. Soon after, the widely popular ride-sharing firm Obike revealed that it has gone bust and is undergoing liquidation.

Had these embattled companies been able to hold on for a little longer, they could have benefitted from the Insolvency, Restructuring and Dissolution Bill, which has only recently passed into law.

The bill, which aims to modernise and reform Singapore’s insolvency and debt restructuring regime, will give cash-strapped companies greater opportunity for rehabilitation and restructuring.

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Once a star company, Singapore’s Hyflux faces major challenges

It had been another record year for Hyflux, as its founder and group CEO Olivia Lum described in its 2010 annual report.

That was the year when the Singapore-based water treatment specialist saw its market capitalisation peak at an eye-popping S$2.1 billion, while raking up another high in revenue and net profit on the back of rapid growth.

But fast forward eight years, and the homegrown firm sent ripples through Singapore for a very different reason.

related: Hyflux to get S$530m lifeline from Indonesia's Salim, Medco groups

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Singapore wants to repeat its water success story with energy: Chan Chun Sing

SINGAPORE is looking to replicate its water success story in the realm of energy, by investing in infrastructure, tapping green energy and acting as a test-bed for innovative solutions here & abroad.

"Just like how Singapore has successfully diversified our supply of water over the years, our next ambitious goal is to enhance our energy resilience to ensure that we are never dependent on any single source of supply," said Minister for Trade & Industry Chan Chun Sing on Tuesday at the opening of Singapore International Energy Week at Marina Bay Sands.

He announced new projects and initiatives ranging from ramped-up solar production to greater support for the energy storage systems that will enable Singapore to better use solar production.

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At an international event on energy resources

Just earlier this month, Singapore’s two leading water desalination plants came under Indonesia’s control after the poorly-managed company Hyflux was bought over by an Indonesia government-backed consortium.

Malaysia has also indicated that they will be raising water prices for Singapore, as their local states like Melaka are paying 33 times more expensive than the subsidised rate Singapore is getting.

Despite having already spent billions on water desalination plants over the past 50 years, the Singapore government has failed to attain water sufficiency in the island. A major reason behind the water shortage is a jump in the Singapore population, which ballooned nearly 50% from just 4 million in 2000 to 5.79 million today.

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Singapore's water success story to be repeated with energy: Chan Chun Sing

why he no mention hyflux?

aint it part of the water self reliant solution for singapore ..

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10 FACTS ABOUT WATER IN S’PORE ‘COZ EVERYONE’S TALKING ABOUT IT

In Singapore, the importance of H20 is multiplied by a million. And if you multiply that by 250 and add the word ‘gallons’, you’ll get the amount we’re fully entitled to draw from the Johore River every day under the 1962 Water Agreement. If you’re bad at math, that’s 250 million gallons.

But hey, we’re not gonna focus on that today. Not entirely anyway. Instead, giving you 10 facts about water in S’pore.

So the next time your peers/family/colleagues start talking about this recurring contentious issue (I mean, let’s be real, this happened before and will happen again), you’ll know what they’re talking about, and be able to join in the discussion.

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Singapore Water Story

Over the last 50 years, we have built a robust and diversified supply of water known as the “Four National Taps", as listed below. Our tap water is well within the World Health Organisation (WHO) drinking water guidelines and is suitable for drinking without any further filtration.

Water from local catchment

Water from local catchment is a pillar of our sustainable water supply. Since 2011, the water catchment area has increased from half to two-thirds of Singapore’s land surface with the completion of the Marina, Punggol and Serangoon Reservoir.
PUB continues to explore ways to maximise our rainwater collection yield and strives to collect every drop of water that falls on Singapore.
Reservoir in the City - An iconic structure at the mouth of Marina Channel and the vision of the first Prime Minister of Singapore Mr Lee Kuan Yew more than twenty years ago, Marina Barrage creates Singapore’s 15th reservoir, Marina Reservoir.

Imported Water

The 1961 Water Agreement between the Johor State Government and Singapore expired on 31 August 2011. Singapore continues to import water from Johor under the 1962 Water Agreement which allows us to draw up to 250 mgd from Johor River until 2061.

NEWater

Singapore’s success story and a pillar of water sustainability, is a high-grade reclaimed water produced from treated used water that is further purified using advanced membrane technologies and ultra-violet disinfection, hence making it ultra-clean and safe to drink.
Presently, Singapore's five NEWater plants can meet up to 40% of the nation’s current water needs. By 2060, NEWater is expected to meet up to 55% of Singapore’s future water demand.
Used Water Superhighway - The Deep Tunnel Sewerage System (DTSS), a 48 km long used water superhighway, conveys used water to water reclamation plants to be treated and purified into reclaimed water, or discharged into the sea. Phase 1 construction of the DTSS is completed. Phase 2 which will cover the western part of Singapore is targeted for completion in 2022

Desalinated Water

Currently, we have three desalination plants with a combined capacity of 130 mgd that can meet up to 30% of Singapore’s current water demand. Two more desalination plants will be ready by 2020. Desalinated water is expected to meet up to 30% of Singapore’s future water needs by 2060.

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Singapore and Malaysia: The Water Issue

“It is not just a matter of money,” Singapore’s then-Foreign Minister S Jayakumar said in a ministerial statement delivered during a special Parliament sitting on Saturday, Jan 25, 2003

“The significance of the water price, for both countries, is Singapore's existence as a sovereign nation separate from Malaysia, & the sanctity of the most solemn agreements that we have entered into with Malaysia.

“The 2 Water Agreements are no ordinary agreements. They are so vital that they were confirmed and guaranteed by both Governments in the 1965 Separation Agreement, also known as the Independence of Singapore Agreement." “The Separation Agreement was registered at the United Nations. Both countries have to honour the terms of the agreements and the guarantee in the Separation Agreement.

“Any breach of the Water Agreements must call into question the Separation Agreement and can undermine our very existence.”

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Singapore’s biggest threat? The water crisis at its door

Singapore was already toying with the idea of recycling water as early as the 1970s. However, the first experiment failed and the pilot treatment plant closed down after only a year due to high costs and technology issues. It was not until much later, in 1998, that the Singapore Water Reclamation Study successfully determined the suitability of reclaimed supplies as a source of raw water.

When NEWater, the brand name of reclaimed water, was officially launched in 2003 it was described by the former United Nations Secretary-General Ban Ki-Moon as the “elixir of life”. However many people, especially the older generation, scoff at NEWater for being “shit water” and avoid using it. But even with its low consumption rates, NEWater continues to be a major source of raw water for Singapore, providing up to 30% of its needs. Today, Singapore has four “national taps.” These are water from the local catchment area, imported water, NEWater, and desalinated water. And diversifying to four options has been important for promoting resource security but the country, and its residents have grown callous as a result. In 2011, Singapore decided it could afford to let its water agreement with Malaysia expire because it had achieved self-sufficiency. However, disappointing as it may be, the truth is that this sense of security is false. And something must be done.

Although the four taps have helped mitigate water scarcity, Singapore remains vulnerable. Today, the island nation still relies heavily on imported water to meet almost 60% of is needs. And this is problematic. The reliance on NEWater and desalinated water, in turn, creates another problem – the need for energy. While these two sources alone are expected to make up 80% of Singapore’s water needs in 2060, both are highly energy-intensive. And as well as being short on water, the natural resource-poor country is short on power too.

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Singapore has had to use water policy to overcome its water vulnerability

To achieve self-sufficiency and end reliance on Malaysian water imports, Singapore’s water policy and research since the 1970s has focused on technology. The NEWater scheme purifies rain and waste water for reuse. The scheme now has a catchment area covering two-thirds of the island. In 2005 the country opened their first desalination plant. The plant turns 30 million gallons of sea-water a day into potable water for domestic use.

Having a self-sufficient water supply was more than just an economic issue, it was sensible foreign policy. Malaysia has had a bargaining chip which has allowed them to tip the scales in their favour during negotiations. It removes the threat of water security from the table. Dry weather in 2016 has left reservoir levels much lower than usual. Levels in the Johor Linggiu Reservoir have reached record lows. The reservoir is down to just 32% capacity. Singapore will now want to get as much as possible out of each drop of water. Countries like Israel who have been able to recapture 86% of their waste water demonstrate the benefits of a successful water recycling system. The country is 60% desert, yet has a surplus of water annually because their recapture rate is the highest on the planet. The water is reused in agriculture with minimal treatment.

Singapore has adopted this scheme itself using NEWater, but is currently unable to achieve the level of efficiency seen in Israel. Singapore’s Limited ground space for water catchment has made the process difficult. The country currently has a catchment area covering two-thirds of the country’s land surface. There are goals to increase this to 90% in the long-term.

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Johor Chief Minister: Sell water to Singapore at same price with Melaka

Speaking to reporters at a media conference, the Chief Minister of Malaysian state Johor proposed that the price of water sold to Singapore should be raised to the similar market price sold to fellow Malaysian state Melaka. The Malaysian Minister echoed the comments of Prime Minister Mahathir Mohamad, saying the current raw water price of 3 sen (S$0.01) per thousand gallons is too low:

“The new price would not be the same as the current one, which is 3 sen per thousand gallons of raw water. It’s time to increase. Perhaps we will increase it to the same rate as sold to Melaka (at 50 sen per thousand gallons). We will review the water price agreements with Singapore to make sure that this can be done. It needs to be discussed more. I think that if the Johor government wants to raise prices at a reasonable rate, Singapore will accept it because that is our hope. The Malaysian government will scrutinise the existing water agreement with Singapore to see whether it would be possible to raise the price.”

Singapore’s local state media played up the propaganda claiming that the water price was raised by “1,600%” according to ChannelNewsAsia. The Singapore government is trying hard to rally Singaporeans, through propaganda and disinformation campaigns, against the new Malaysian government. Singapore’s state media rank 153rd in the world for credibility, according to an independent press freedom agency RSF.

In the past decade, the Singapore water supply monopoly company profited over S$1 billion from the sale of treated water. Despite posting record profits in its annual report every year, the Singapore Public Utility Board (PUB) raised water prices by 30% in the past year.

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Malaysia PM Mahathir Mohamad wants to raise price of raw water sold to Singapore by more than 10 times

Malaysia's Prime Minister Mahathir Mohamad has said he wants to increase the price of raw water supply to Singapore by more than 10 times to reflect the higher cost of living.

The current water agreement, which expires in 2061, sees Singapore drawing up to 250 million gallons a day (mgd) of raw water from the Johor River, and Johor entitled to 5mgd of treated water from Singapore.

Singapore pays 3 sen (1 Singapore cent) per 1,000 gallons of raw water, and sells treated water back to Johor at 50 sen per 1,000 gallons. Singapore has said this price is heavily subsidised and below the cost of treating the water.

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Malaysia is not backing down in their attempts to raise water prices for Singapore