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Losses suffered by Hyflux

1. Someone said that Hyflux incurred large losses on their overseas projects on on underquoting for the supply of water in the Tuaspring project.

2. Hyflux invested in the following overseas project

Tianjin Dagang Newspring – loan of $121 million taken from a China bank
Oman Quarayyat IWP – $250 m project awarded to Hyflax
Hydrochem Saudi – $72 million awareded to Hyflux

The total investment by Hyflux in these three overseas projects was $450 SGD. There are no information about the losses, if any. If we assume that the loss is 20%, it would amount to $100 million.

3. Hyflux invested $1,300 million in the Tuaspring project. The book value was reported to be $1,470 million. I guess that interest and management expenses must be added to the original project cost.

The water plant was handed to the Public Utilities Board for free, on the termination of the long term water agreement. The power plant was sold to the Francis Yeoh of the YTL group for $270 million.

Hyflux incurred a loss of over $1,000 million on Tuaspring.

4. If Hyflux had underquoted for the water that is provided under the long term contract, how much would that be?

Hyflux was awarded a 25 year contract to produce 318,500 cubic meters of water a day at $0.45 pcm. The total contract value is $52 million a year of $1,300 million over 25 years.

If Hyflux had underquoted by 20% for the production of water, the loss would be $10 million a year or $250 million over 25 years.

5. From the above information, I conclude as follows:

a) The loss (if any) on the overseas contracts would be less than $100 million.
b) The loss (if any) from underquoting of the water price would be less than $250 million
c) The bulk of the loss could be attributed to the generation of electricity at a time when the price had collapsed due to oversupply.

 

Tan Kin Lian

 

 

yyy
READER COMMENTS BELOW

5 Responses to “Losses suffered by Hyflux”

  • Sad Case:

    The real loser are those who invest in Hyflux.
    Tuas plant should has been the responsibility of the Government for such critical operation in the first place.

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  • 大吉利是!:

    大吉利是!

    大年初一一打开这个网页就看到这个,真的是大吉利是,大吉利是!

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  • panyusg:

    A Committee of Enquiry should have been convened. Hyflux was no ordinary listed company. It was promoted by very high level VIPs in Singapore. Many ordinary folks invested their hard-earned, after-tax savings and lost it all.

    If SIA could be bailed out, why not Hyflux?

    If the contract was with the Government, surely there are ways to address the so-called under-bidding and also to investigate why the bid was accepted. Did anyone in the Approval committee or Managment of the Government not realize that Hyflux would go bankrupt?

    So far, there has been no prosecution of any personal corruption. So, it was presumably a matter of wrong business decisions.

    Without a public enquiry, we will never learn and Singapore Inc may encounter a future failure.

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  • SingTel lost 1.9Billion:

    In India telco company. India government fined SingTel invested India telco 3.x billion dollars. SingTel as major shareholder of the telco has to fork out 1.9billion for its shares of the penalty.

    India last year fined Xiaomi 7Billion dollars and Oppo/Vivo few billion dollars too. Other companies too.

    India government is such unscrupulous. Singapore is second largest foreign country investor in India a lot more than US, China, Japan, Germany the world top 4 GDP. If India is such attractive US, China, etc investments in India should be like 10 to 50 times of Singapore right?

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  • Temusik Patriot:

    I remember at her peak she came out with a gadget CONverting the air we breath to WATER and the Press went Wild with it…SILLY IDIOTS believin an IDIOT

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