New gas framework aims to balance supply stability with the need for competitive pricing in Singapore’s energy transition
The Singapore government announced that it will price gas for power generation companies on a cost-plus basis, in an effort to ensure stability while maintaining fair pricing amidst a centralised gas procurement model. The decision was disclosed by Second Minister for Trade and Industry Tan See Leng on Sept 9, 2024.
Addressing concerns in Parliament, Tan explained that the new government-owned entity, Gasco, will be focused on meeting Singapore’s power generation needs, rather than maximizing profits. The entity will be staffed by professionals with a long-term view to guide gas procurement, aligning its portfolio with national needs, including electricity demand growth and decarbonisation plans.
The legislative changes also grant the Energy Market Authority (EMA) powers to direct power generation companies to purchase gas from Gasco. In addition, the changes enable EMA to take emergency measures, such as imposing a power rationing in crises, and recover costs for initiatives related to energy security, market development, and decarbonisation.
Tan emphasized that while the new structure is designed to stabilize gas pricing and ensure reliable supply, Members of Parliament expressed concerns about the competitiveness of gas prices under the new framework. The government aims to strike a balance between ensuring stable supply and addressing pricing competitiveness in the context of Singapore’s energy transition.
