Assoc Prof Daniel Goh Pei Siong: To ask the Minister for Trade and Industry whether the Government has responded to Senoko Energy's request for a rescue package and whether our energy market is in trouble.
Written reply (to be attributed to Minister for Trade & Industry Mr Chan Chun Sing)
1. Mr Speaker, Senoko Energy Pte Ltd (“Senoko”) has clarified publicly that its current financial situation does not require additional funding from the government in the foreseeable future, and that its outlook on the local power industry remains positive.
2. Power generators have long asset lives of about 30 years. During this period, the investment of power generating companies (“gencos”) are subject to cyclical fluctuations in demand and supply, given that Singapore’s electricity market is a competitive one. We are currently in a situation where there is an excess supply of generation capacity. Over time, this oversupply should ease as demand rises and old capacity is retired.
3. To help the gencos weather the present circumstances, EMA has introduced several measures. For instance, since August 2018, flexibility was provided for gencos to retire their steam plants. EMA also worked with the gencos to reduce their contracted Liquified Natural Gas (LNG) supply and divert their excess LNG purchases. The LNG terminal tariff payable by the gencos was also lowered, which would provide gencos with cost savings. In addition, EMA developed a scheme to support gencos to maintain high operational reliability and adopt good labour management and capability building practices.
4. Over the longer term, to ensure our electricity market remains economically efficient and resilient, EMA is also working on initiatives such as introducing a Forward Capacity Market to procure in advance the generation capacity we need to ensure reliable electricity supply. This should also provide a more steady income stream for gencos.
5. Ultimately, EMA’s primary responsibility is to maintain a well-functioning and sustainable market that promotes competition and an electricity supply that is efficient, reliable and secure. EMA cannot be responsible for the commercial viability of individual firms. EMA will continue to work with the gencos to ensure that information is available to help them make the best decisions, and ensure that our energy market remains resilient and competitive.