PUB issues default notice to Tuaspring to safeguard water security

Singapore’s Public Utilities Board (PUB) has issued a default notice to Tuaspring Pte Ltd (TPL) to remedy defaults arising under the Water Purchase Agreement (WPA) between PUB and TPL.

The PUB noted that TPL has been unable to fulfil various contractual obligations under the WPA, in particular, by failing to keep the plant reliably operational as required. In addition, TPL has not been able to produce financial evidence to demonstrate its ability to keep the plant running for the next six months.

In 2011, PUB signed a 25-year WPA with TPL (a wholly-owned subsidiary of Hyflux Ltd), for Singapore’s second and largest desalination plant, which is one of the three desalination plants currently in Singapore.

Under the WPA, TPL has to deliver up to 70 million gallons of desalinated water per day to PUB for a 25-year period from 2013 to 2038. Desalinated water is one of Singapore’s four national taps, to ensure a diversified and sustainable water supply, and Singapore’s desalination plants are integral to the country’s water security.

The PUB has stated that it has provided sufficient time for TPL to resolve its operational and financial defaults. Given TPL’s current financial position, TPL’s inability to fulfil its contractual obligations is unlikely to change in the immediate to longer term. With the issuance of the default notice, PUB requires TPL 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 and take control of the plant.