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Energy Crisis, Singapore Threatened In Total Darkness Without Electricity

Merdeka.com – Singapore is currently in the midst of an energy crisis that could threaten the electricity supply for businesses and consumers.

Soaring fuel prices have plunged Singapore’s electricity supply market into a tailspin after three power companies announced within a week they would temporarily suspend electricity services in the country.

Although the Singapore government says the energy supply is still safe, the world is currently facing a power supply crisis.

Reporting from the Nikkei Asia page, Thursday (21/10), the Energy Market Authority of Singapore (EMA) said it would seek to provide government reserve fuel to power companies in Singapore when gas supplies run low. They also asked power companies to secure fuel supplies “at least enough to meet retail consumer demand.”

“This policy is a necessary measure to secure the supply of fuel and electricity,” the statement said.

In the midst of soaring global fuel prices around the world, Singapore relies on 95 percent of its electricity supply from imported gas. This gas is distributed from pipelines originating from Indonesia and Malaysia or shipped by ship in the form of liquefied natural gas from gas exporters.

In recent months, liquefied natural gas prices have skyrocketed after rising demand from China and other regions while gas and coal production plummeted. Meanwhile, gas supply via pipelines to Singapore is affected by production problems at Indonesian gas refineries, said EMA. The condition of the tight supply from Indonesia is estimated until the end of the year.

“Singapore’s electricity crisis is worrying,” said Ken Lee, a senior fellow at energy research firm Wood Mackenzie. The price of electricity supply in Singapore was around SGD 115 (USD 85 = Rp 1.2 million) per megawatt-hour from January to September then jumped to SGD 635 on October 19 last week.

Lee said the high demand for electricity also caused prices to rise. This year Singapore consumes 5 percent more electricity than the same period last year due to the economic recovery after last year’s downturn.

The existence of this disruption in the local market forced electricity supply companies in Singapore, which had promised lower tariffs for household consumers, had to cancel their plans.

Earlier this week, Best Electricity Supply, which entered the electricity services market in 2015, announced it was no longer willing to continue in the household sector, citing “the fragile state of the energy market.” The company became the third to withdraw from the local electricity market in the past week.

“Power providers, especially independent companies that do not have their own power plants, are most affected by this condition,” said Lee. “They are unable to adjust the price of electricity tariffs because they have already signed contracts with consumers.”

One of the questions now is how the electricity crisis will impact the business world in Singapore. Singapore’s flagship companies are manufacturing, including the electronics and chemical sectors, both of which require large power supplies.

“We haven’t heard of industries and manufacturing being affected by this condition. However, industries that have not signed a price contract are likely to be affected because they cannot avoid the current price spike,” said Lee.

A number of business sectors in Singapore are now preparing for the worst conditions.

Since July, the medical equipment manufacturer Racer Technology admitted that they experienced an increase in electricity consumption. CEO Willy Koh told Nikkei Asia their spending on electricity increased by as much as 30 percent amid the current energy crisis.

“Currently we have a shortage of manpower, then electricity rates have gone up, so we are worried about the sustainability of this manufacturing,” he said, referring to the lack of manpower due to the Covid-19 pandemic. “Production costs continue to rise,” he said.

The government has called on its citizens to save electricity for the next few months but electricity consumption is urgently needed in a tropical country like Singapore which requires air conditioning, especially for residents who are still working from home due to the pandemic. The increase in electricity prices has the potential to reduce electricity consumption but it will also be a heavy blow for the economy which is just about to recover from the pandemic. [pan]


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