NEA overpaid project partner $530,000; lapses also found in HTX, MPA and EDB

The National Environment Agency (NEA) overpaid a project partner by $0.53 million for the operation of a waste-to-energy plant from December 2021 to January 2025.

- Chin Soo Fang

NEA did not check with the partner for an update of the project's financial model, which would have included necessary adjustments to costs. It did so only when the Auditor-General's Office (AGO) asked about it in August 2024.

This was noted in the AGO's annual report released on Sept 9 that highlighted key lapses by various ministries and public agencies for the 2024 to 2025 financial year.

In a statement on Sept 9, NEA identified this project as the $1.95 billion TuasOne project that was originally awarded to a consortium led by Hyflux in 2015.

NEA acknowledged that the financial model was not updated with the correct parameters, and that it should have exercised greater due diligence.

It said TuasOne had since reviewed and updated its financial model, which was separately verified by an independent auditor. NEA will recover the $0.53 million overpayment from TuasOne, it added.

NEA said it has enhanced its processes and team overseeing public-private partnership projects, including ensuring that more complex issues relating to such contracts are adequately supported by in-house or professional legal and finance expertise.

The AGO report said that in 2022, NEA had consented to TuasOne's restructuring on the premise that there would be no increase in payment arising from its change in shareholding. However, the AGO estimated that NEA would be paying $8.09 million more post-restructuring.

In response, NEA said the restructuring was critical to ensuring the continued operations of the plant. Prior to this, the project had experienced significant challenges, including Hyflux's insolvency in 2018.

NEA said that when it consented to the restructuring, both parties had relied on an outdated financial model.