Round Up Speech for the Second Reading of the Gas (Amendment) Bill

ROUND-UP SPEECH BY DR TAN WU MENG, SENIOR PARLIAMENTARY SECRETARY FOR TRADE AND INDUSTRY AND FOREIGN AFFAIRS, AT THE SECOND READING OF THE GAS (AMENDMENT) BILL ON 1 OCTOBER 2018

1.         Mr Speaker, I thank the Member for the queries and support for the Bill.  Let me address NMP Mr Irshad’s questions on our energy supply, sustainability, and resilience.

Energy security

2.         As a small country without any natural resources, Singapore imports nearly all of its energy needs.  This makes us vulnerable to supply risks.  Prior to 2013, we were completely reliant on Malaysia and Indonesia for our natural gas supply, which is transported to us via pipes.  As the Member has noted, our piped gas contracts are set to expire over the next decade or so.  As all of our gas supply is handled commercially, whether our piped gas contracts are renewed will depend on commercial negotiations.  We welcome renewals or new contracts for piped gas.  In October 2017, EMA lifted its moratorium on new piped gas contracts to facilitate this. 

3.         To enhance our energy security and competitiveness, the Government has pursued diversification of our gas sources as a strategy.  

4.         To that end, the Government has built a Liquefied Natural Gas (LNG) terminal, which has enabled us to procure natural gas in the form of LNG from a wider range of sources such as Australia, the US, as well as Trinidad and Tobago.  We have also adopted a Competitive Licensing Framework to procure LNG on a tranche-by-tranche basis.  This will provide Singapore the flexibility to take advantage of opportunities in the global gas market, including more competitive price indexation and contract terms, while persifying our gas sources to reinforce our supply security.

5.         To further strengthen our energy security, we have also added capacity to the LNG terminal ahead of demand, providing us with spare capacity to cater for any potential disruption in our piped natural gas supply.  The terminal today has a peak throughput capacity of 11 million tonnes per annum, sufficient to meet demand for the near future. The Government will continue to plan ahead for our next phase of LNG infrastructure development.  We are currently exploring several options to see which best meets our long-term LNG needs and further improves our energy security.

6.         As I have highlighted earlier, the proposed amendment in clause 14 of the Bill will further enhance EMA’s ability to deal with a wide range of potential risks that may emerge.  It empowers EMA to issue directions to require any person to take measures to address or alleviate the severe gas shortage, or prevent it from occurring or continuing. 

7.         Beyond meeting our domestic energy requirements, we have been taking steps to capitalise on our strategic location to develop Singapore as a regional gas hub.  Our LNG terminal can conduct storage and reloads, and we have spare capacity available for trading.  We have also been working with the industry to build a strong supporting ecosystem, with players such as consulting firms, law firms, ship brokers, Price Reporting Agencies and other services providers; all these and more have also established their presence in Singapore, adding to the depth of the ecosystem.  Thanks to the efforts of Enterprise Singapore in building the LNG trading community, there are now more than 45 companies with an LNG trading or business development presence here.  To further increase dynamism in our gas market, EMA has also formalised the spot LNG import framework in October 2017.  Interested parties can now import spot LNG, subject to a market-wide cap of 10% of our long-term contracted gas sales agreements. In summary, there’s a whole ecosystem approach to handling our energy resilience.

8.         Let me now address the Member’s queries on our energy sustainability.

9.         Singapore is exploring other ways to broaden our energy options. Among the renewable energy options, solar photovoltaics (PV) has the greatest potential for wider deployment in Singapore. Even then, there are challenges to adopting solar energy at scale, for example, competing uses for the limited land, and the intermittency of the electricity generated by solar PV due to high cloud cover and urban shading. 

10.      Despite these challenges, we have grown the amount of solar PV deployed from 10 megawatt peak in 2012 to more than 160 megawatt peak today. This is just a start. We are planning to raise our solar generation capacity to 350 megawatt peak by 2020 and to 1 gigawatt peak beyond 2020. 

11.      We are also investing in R&D to increase the efficiency of solar PV and the accuracy of forecasting solar power output in our tropical climate. This includes test-beds on utility-scale energy storage systems that could facilitate greater deployment of solar PV in Singapore while ensuring that our power system’s security, reliability and stability are not compromised. 

Energy resilience

12.      Let me now address the Member’s queries on our energy resilience, starting with his question on the safeguards we have for critical services. My colleague, SMS Koh Poh Koon, has addressed this during Question Time, but let me just share this again. 

13.      In the design of any electricity grid system, we have to balance redundancy and assurance with cost imposed on consumers. The higher the degree of redundancy, the smaller the probability of disruption, the higher the cost at the system level. So we have to find a balance, and have adopted a calibrated approach in our system planning, with a certain level of redundancy at national grid level, together with a higher level of redundancy for critical systems at the local level. Critical services and infrastructure, such as lifts and traffic signalling systems, have contingency plans to deal with power outages on the national grid. For example, passenger lifts must be installed with an Automatic Rescue Device, so that if there’s a power failure, the lift will park at the nearest floor and open its doors. Furthermore, a standby generator is required for lifts in very high-rise residential buildings or those serving both residential and non-residential uses, which will provide emergency power to resume at least one lift’s operations.

14.      As for our public hospitals, these are provided with dual supply sources, so if one of the supply sources fails, each is able to provide backup to the hospital\.  In addition, if there is any disruption from the main power source, backup power systems, such as diesel generators and Uninterrupted Power Supplies (UPS) systems, and these would automatically kick in, to support all critical equipment and critical facilities.  Hospitals also carry out regular and preventive maintenance to ensure that both their electrical installations and backup power systems are in good working condition.  During the power outage on 18 September, hospitals in the affected areas activated their back-up power supply immediately, and this prevented disruptions to their operations and patient care.

15.      The Member also spoke on the importance of having a well-equipped public to respond to emergencies is well-noted.  EMA is working with the industry to review its processes for handling events such as the recent power outage to ensure they remain satisfactory.  During the blackout, SP Group officers were immediately activated and deployed at key substations and control centres. SP Group also provided the public with progressive updates on its social media channels and concurrently informed the media of updates as well.  But as with every incident, we will review this incident carefully, to see how we can further improve our responses. 

16.      Mr Speaker, I would like to thank the Member who spoke on this Bill, and the valuable comments provided.  In summary, this Bill will ensure that the Gas Act continues to remain effective and relevant in enhancing gas supply security and strengthening safeguards for such critical infrastructure. 

17.      Sir, I beg to move.