Question
Mr Gan Thiam Poh: To ask the Minister for Trade and Industry what is the projected reduction of electricity and gas tariffs in the next six to twelve months in view of the lower price of fuel oil.
Oral Answer by Mr S Iswaran, Second Minister for Trade and Industry
1. MTI and EMA do not project electricity and town gas tariffs. Both the electricity and town gas tariffs are reviewed by EMA on a quarterly basis to ensure that the tariffs fairly reflect the underlying costs of production, including fuel costs.
2. The fuel cost component of the electricity tariff is based on the average forward fuel oil and dated Brent prices in the first two and a half months in the preceding quarter, and makes up approximately half of the electricity tariff. For town gas, the fuel cost component is based on the average forward fuel oil and naphtha prices for the quarter, and makes up about 40 per cent of the tariff.
3. The price of natural gas, which is the main fuel used to produce electricity and town gas in Singapore, has fallen in tandem with global oil prices. This is because our natural gas contracts are indexed to oil prices, which is the market practice in Asia.
4. In the recent tariff revisions, the electricity tariff for January to March 2015 decreased by 7.9 per cent to 23.29 cents/kWh, compared to a decrease in fuel cost of 16.4 per cent. The town gas tariff for February to April 2015 decreased by 8.7 per cent to 19.02 cents/kWh, compared to a decrease in fuel cost of 23.1 per cent.