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Lim Tean talks cocks on electricity price rise

In Energy, Infrastructure on 10/01/2020 at 11:17 am

The chief cock of the People’s Voice Party, Mr Lim Tean via his FB post, criticised the recent increase in electricity tariffs by 3.5% despite natural gas prices collapsing. Mr Lim concluded his post by saying that “Singaporeans have every right to demand explanations from the SP group, Temasek, EMA and Mr ‘New Taxes’ Heng!”

He obviously doesn’t have a clue about anything, given that as far back as 2012, I explained the situation. Below is a piece that I’ve had to update because when it was first written, the LNG gas terminal had yet to open.

Unlike the oil market*, the natural gas market, is not a global, nor an efficient one (outside of the US). (I’ll explain this in detail later using S’pore and Qatar as examples).There is only a limited global trade in gas (the S’pore government is trying to encourage such trade building a gas terminal that is now operational), which can be transported in tankers, but mostly gas must move in pipelines over land in Europe and North America, the biggest users of energy. Example: natural gas prices have been rising in Britain this year even as they have been falling in the US.

Supply has soared in the US because of increased production from hydraulic fracturing, but demand in the US cannot change rapidly. Power plants that can burn gas or oil were shifted to gas long ago.

S’pore, as readers, should know gets its supply of gas from gas fields in Indonesia and Malaysia. The energy MNCs who developed these kind of fields did not develop these fields until they were assured that there were assured long-term buyers of the gas (This is still true today). There are a lot of upfront costs and the lead period from the time the fields are being developed to the first shipment of gas to the customer are measured in decades. Example: gas was discovered in Qatar in large quantities in the 1980s. It became a major exporter only in the early to mid-noughties. It took that long to build the facilities to ship the gas to places like Japan and South Korea, taking into account the time to negotiate the contracts.

Then there is the issue of pricing. Until very recently, natural gas contracts were priced off the price of oil because they were often found together, and both were scarce.

When the gas contracts for S’pore were negotiated all those many years, the price of the gas that S’pore pays was priced off the price of oil. Hence one reason of the paradox of us paying higher prices for gas when the price of gas is at a 10-year low. Another reason is that S’pore is locked into long-term contracts.

Now S’poreans are not the only people who got “screwed” by the breakdown between the price of gas and oil. KKR and TPG, giant and successful US private equity investors invested billions of their investors’ funds in TXU. One of the things they were betting on was that gas prices would be priced-off oil prices for the foreeable future. Err even Buffett has lost money buying TXU bonds.

But what about the gas terminal which now accounts for 38% of imported gas, shouldn’t this mean that its gas is cheaper?

Sadly

In Asia, purchased gas imports are typically pegged to oil price changes by pre-determined formulas due to the lack of an established pricing benchmark for gas trade. This nexus between oil and gas prices could weaken though, as more gas is being traded with greater flexibility in the future.

Constructive, nation-building media

And Lim Tean wants to be PM? But then as I wrote

Look at Lim Tean’s record. Still no jobs rally after collecting money in 2017 for rally, and no picture, no sound after collecting money to sue CPF yrs ago: Finally Lim Tean called to account on a “broken promise”. To be fair, he did deliver on defamation video two years late. But it was BS.).

Can he be trusted to do anything but grab the money?

Is there really a better alternative to PAP 4G?

But then

[M]aybe he’s not a money face but has dementia making him forget that he took money from the public.

Lim Tean: talk cock king / Does he have dementia?

 

  1. “The electricity tariff also includes non-fuel cost, such as the costs of operating the generating plants, manpower costs, capital costs and an adjustment component to account for any variation between forecasted and actual electricity consumption.

    As the average price of natural gas delivered to Singapore under long-term gas contracts was relatively flat in the fourth quarter of last year, over the preceding quarter, the increase in the electricity tariff for the first quarter of this year was mainly due to an increase in the non-fuel cost of the power generation companies.”
    Lee Lie Yen

    Director

    Economic Regulation and Licensing

    Energy Market Authority

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