Wednesday, October 1, 2008 9:23
HDB and power companies – what’s happening?
In Uncle Leong • 3,767 views • 68 Comments
Leong Sze Hian / Columnist
I was really tired this morning, when I received a SMS from TOC editor Zheng Xi at 5 a.m. to write on the U.S. congress rejection of the bailout, and TOC deputy editor Andrew Loh’s SMS yesterday to research the power companies’ profits.
Then, the news of JBJ’s demise came - and memories of my 3-hour meeting with him when he invited me for tea last year, broke my lethargy.
I would like to say if I may - that I would like to dedicate these two articles to JBJ.
Electricity crisis?
I refer to the report “Households to see average rise of about 21% in electricity bills from Oct” (CNA, Sep 29).
Singapore Power’s Net Profit After Taxation increased by 72 per cent from $ 630 million in FY 03/04 to $ 1.086 billion in FY 07/08 - an annualised increase of about 15 per cent per annum.
The power generation companies like Tuas Power had a profit increase of about 70 per cent from $ 104 million in 2006 to $ 177 million in 2007 ; Powerseraya’s profitis for FY 07/08 increased by 30 per cent in a year to $ 218 million, Senoka Power’s profits for the year ended 31 March, 2008 was $ 130 million.
The above financial means that the total profits of the power companies was about $ 1.604 billion.
This sum is even greater than the original projected increase in revenue from the 2 per cent increase in GST last July to help the needy.
To what extent has the pegging of electricity tariffs solely to fuel prices, contributed to the high profits of the power companies.
Shouldn’t other factors like increase in profits be considered too ?
If the formula for transport fares can be pegged to average wage increase, average inflation and productivity, why is the electricity tariff pegged only to fuel prices ? (Note : Even this formula has led to ever increasing record profits for SMRT).
Now that two of the three power companies have been sold to foreign companies, and the third one is in the process of being sold, will the profits of power companies continue to rise ?
Since Singapore Power and the power generation companies (before their sale) are in a sense, owned by the state, why is the state making a whopping $ 1.604 billion in profits in a year, from providing a monopolistic essential good to Singaporeans ?
Instead of just announcing tariff increases due to fuel prices, why not require the projected increase in profits to be announced too ?
What’s the point of announcing a 50 per cent increase in the U-Save rebate on national day, only to see it being eroded by the subject tariff increase just a month plus after ?
As to “But the government rebates of $ 310 to $ 330 will more than cover the increases for these households” (one to three-room HDB flats), according to the Department of Statistics (DOS), only 271,650 were 1, 2 and 3-room HDB flats, out of a total of about 1,118,260 residential properties in 2007.
Does this mean that the U-Save rebates are not enough for about 76 per cent of households (846,610 divided by 1,118260) ? (Note : private property households don’t get any U-Save rebates).
I also refer to media reports on the Electricity Vending System (EVS) trial.
Consumers will pre-pay for electricity under the EVS.
If the trial is successful, it is the plan to have the EVS as the electricity delivery system for all consumers, by 2010.
As of June this year, about 13,700 households have been put on a pre-paid metering scheme (PAYU) after they had their power supply cut off or were in danger of having the supply disconnected (“More unable to pay electricity bills”, ST, Aug 29).
Social workers have also said that surprisingly, there has been a 35 per cent increase in 4 and 5-room HDB households, who are unable to pay their electricity bills.
This brings up the question as to whether the U-Save Rebate for utilities are enough to offset the rising inflation of electricity tariffs and bills.
I would think that most households may try very hard to pay their electricity bills first, over other outstanding bills, as I cannot imagine what life may be like when one’s electricity is cut-off.
What will happen to households like the 13,700 who cannot pay now, and new households who may be unable to pay in the future, if the EVS is fully implemented in 2010 ?
At least now, if you cannot pay, you can be in arrears, giving one a few months’ grace, before electricity is cut-off, and replaced by the pre-paid metering scheme.
I would like to suggest that the current pre-paid metering scheme, and a grace period for arrears, be continued, particularly for lower-income households.
Otherwise, Singaporeans may become even more financially stressed under the EVS.
It was last reported in the media in 2006 that the number of accounts in arrears exceeding $ 500 for three months and longer is about 3,600, against about 10,000 reported in the media in 2005.
So, why has the number of Pay-As-You-Use (PAYU) meters increased to 13,700 ?
In Malaysia, the government announced on its last national day on 31 August, 2008, that free electricity would be given to all households with electricity bills not exceeding RM 20 to help the needy.
Financial meltdown?
The anticipated bank bailout did not receive the U.S. Congress’ approval and the Dow Jones dropped 778 points.
Is it the end ?
Perhaps we need to start at the very beginning - how and why did the financial crisis start ?
The current financial crisis began with the bailout of Fannie Mae and Freddie Mac (F & F).
Sub-prime and HDB
Are there parallels, historical similarities, contrasts and comparisons, between the bailout of F & F in the United States, and Singapore - in the context of housing policy ?
F & F were founded with the primary aim of helping more Americans to own homes.
The HDB was set up with a similar objective.
Just as F & F enabled poorer Americans to get home financing, where banks had historically been hesitant to lend, by guaranteeing loans, the HDB actually went even further by building the flats and providing the loans.
As it was implicitly perceived that F & F was backed by the U. S. Government, lenders lent to practically anybody (sub-prime), without worrying about the risk of default.
Well, before the HDB introduced recent measures like the loan eligibility letter, it too in its early years sold flats and gave low interest loans to practically anyone who applied.
Now, it will only give HDB concessionary loans to those who upgrade to a bigger flat, but not to those who down-grade or buy a same size flat.
The chairman of the U.S. Federal Reserve (the Fed) had sounded the alarm long ago, that F & F was a monster that may grow out of control.
HDB
In Singapore, I guess, probably the crunch came when it was reported that about 40,000 HDB flat dwellers were in arrears.
The latest HDB Annual Report does not show the number given financial assistance anymore, but the previous Annual Report showed over 26,000.
So, from 1 January 2003, banks were allowed to give loans for HDB flat purchase.
Even those who were eligible for the maximum two times HDB concessionary loan, could choose a bank loan.
In fact, many who were lured into choosing bank loans because of lower interest rates in the first three years, many now be regretting as bank rates are generally higher than HDB’s.
It was reported in the Straits Times this year, that reportedly about 60 HDB flats a month, are foreclosed by banks.
The last reply in Parliament to a MP’s question, was that seven per cent of HDB bank loans were in arrears over three months. The estimated number of HDB bank loans is now about 100,000.
In comparison, even at the height of the sub-prime crisis in the United States, the estimated delinquency rate is 5.12 per cent for home mortgages (“A simple, painless way to tackle the credit crisis”, ST, Sep 22).
According to the Economist (Sep 27), the chart in the article “The doctor’s bill”, shows a 90+ days delinquent rate of only about 4.5 per cent.
In this connection, the HDB said that only 360 flat owners voluntarily surrendered their flats between 2003 and 2006.
From the experience of HDB flat owners who cannot pay, the HDB has asked them to sell in the open market, helps to initiate a valuation of the flat, and allows any loss between the flat sale proceeds and the HDB loan balance outstanding to be paid by installments in the future.
Such “open market” sales by those who cannot pay for their mortgage, are of course not counted as “voluntarily surrendered their flats” statistics.
For private property loans, the first charge was changed from CPF to banks with effect from 1 September 2002.
For pre-1 September 2002 housing loans, only the CPF Minimum Sum will be protected (first charge) from the mortgagee bank, when the borrower reaches age 55.
The above two measures partially solved the problem of defaulted mortgages which had CPF as the first charge.
The U.S. experience of encouraging particularly poorer Americans to own homes has now resulted in the sub-prime crisis, and the bursting of the housing asset bubble.
It is still not known, to what extent the bailout will cost American taxpayers.
In Singapore, to what extent has our over 80 per cent home ownership achievement, resulted in the loss of homes and maybe CPF life savings too ?
We don’t really know, because unlike in the U.S., there are no regularly published break-down statistics on HDB concessionary loans, HDB bank loans, private property loans, arrears, default, foreclosure, CPF losses, negative equity sale losses, etc.
In this connection for example, the last time a reply was given in Parliament to a question - about three per cent of about 11,000 first-timer HDB flat-buyers on bank loans, were in arrears over three months.
One needs to note from this statistic, that it only refers to “first-timers” on bank loans.
Another difference possibly, between the U.S. and Singapore, may be that whilst taxpayers’ money are being used for the F & F bailout to help Americans keep their homes in a rapidly assedeclining environment, perhaps the foresight of the Singapore Government has forestalled the eventuality of a sub-prime or housing asset bubble crisis.
In this regard, perhaps the only slight blur on the silver lining, is that both HDB and private property price indexes now are still below their last highs in 1996.
Another possible difference in future scenarios, may be that the U.S. crisis is more confined to housing, as Americans’ pensions cannot be used for home purchase.
In Singapore, because of the use of CPF for housing, only the future may tell, as to what extent, particularly lower-income Singaporeans, may have difficulty monetising the last reported statistic that even the lower-income have about $ 138,000 of equity in their HDB at retirement.
In this regard, I understand that the HDB may be reviewing its policies, like the 30-month waiting period to rent, buy a smaller new HDB flat, or down-grading from private property, to take into account the financial plight of applicants.
I hope that the HDB’s policy review, will follow the U.S.’s focus and rationale in the F & F bailout, i.e. to help people keep their homes.
According to the article “Too many data cooks” (Newsweek, Sep 15), statistics in many countries are unreliable and may be watered down to look better.
In a sense, we may be better off in Singapore, as some of the above-mentioned remarks on statistics may indicate that not having regular break-down statistics may actually be better than having fudged ones ?
In memory of JB Jeyaretnam.
This article was written on 30 September 2008.
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68 Comments
isa
Go on and complain all you want…
Can you do better?
Daniel
Thank Leong Sze Hian for your contributions.
As usual, these coffers play pranks again and again when there is no check and balance.
Ahgong
Probably i think people missed out a very important point,
If the power companies do not have continuous profit, how the hell temasek is going to sell it to the foreign investor? If they can’t sell, then how are they going to patch the big big lobang ( helping the needy in US wor !! ) ??
BeWary
Good Article Thanks TOC
If u make a comparative study with Hong Kong, Hong Kong has recently reduced
its tariffs for utilities. It is sheer profiteering at the expense of consumers.
There is no basis for the increase.
red_dot
It appears most Singaporeans are not aware that the Electricity Vending System(EVS), now being on trial use, will become the norm for all households
by 2010. Singaporeans are also faintly aware that it will be a pre-paid system
like the pre-paid parking coupon.
When the time comes for the eventual implementation in 2010 it will be a national shocker to majority Singaporeans as such details were not publicize in the media.
Why there is no protest of such a forthcoming EVS system? Why are the Members of Parliament and the media keeping dumb as well?
blade
great article. i was researching for info to write an article on recent price hike in electricity and transport fare when i bumped onto this article and this site..
many pp feel the pinch, complain to frens, family and in forum, but no one is acting.. many articles in papers, but still is there any action taken by the authorities?
i applaud Mr Leong for his effort in researching on the above issues. The public is aware and concern about the price hike and Mr Leong has further questioned the need for increase with statistics.
Moreover, changes in utility charges affect everyone, the rich, the poor, and the middle class, the good, the bad and the ugly. While our Finance Minister has called for wage control to control inflation, why cant government call for utility charge control to control inflation? (esp when singapore power is earning exorbitant profit).
We have all the statistics and basis to call for more help for the citizen, or rather reduce the burden on an average citizen. But who’s gonna act to make our voice heard to the authorities? And it’s no use only to have our voices, but also how can we make them understand our concerns and step in to help?
I sincerely hope the authorities are indifferent like what was portrayed in the advertisement for Radio Gold 90.5FM.
While we are increasing our electricity tariff, Hong Kong announced that theirs will go down by 3%.
https://www.clpgroup.com/Media/CurRel/news/Pages/20080923_02.aspx?lang=en
And do check out the chart about how much electricity tariff has raisen in major cities since 2005.
Daniel
Hope that Leong Sze Hian will give his view on the impact of great electricity hike on inflation. The consequences of such price hike extend not only to individual family but increase inflation on greater scale as the shops/malls pass the cost back to consumers by increasing the price of products including necessities.
I am totally surpised when gov says that it is 8 years high but is it ? When is the last record that match 22% high ? I couldn’t remember that there is such precedent. Is the gov treating as a fool again ?
DrizztNeo
It would be very interesting if somebody can study if the price increase of electricity has reached a stage whereby alternative energy sources like wind and solar/thermal energy has become competitive enough. For me, i hope that we can vote in a government that can become more proactive in encouraging green energy. Even google has just announced a comprehensive proposal to reduce usa depedence on fossil fuel today which i hope any competent government would also start to initiate a similar strategy. I envisioned two main obstacles of such implementation in singapore; bureaucracy( not willing to change) and possible interference from the power companies.
Daniel
DrizztNeo ,
I do not think it is possible as the gov selling off Singapore electricity assets means that this government has a obligation to fulfil their contract in generating profit for those foreign companies who bought it (which I seriously considered it a traitor, no question, no debate is ever raised concerning the sale of national asset. Am I surprised that Singaporean citizen is continually been betrayed ?) . These foreign companies pay a hefty sum, one I recall of $3.2 billions for one of the local electricity state companies (you might wonder where the money end up wiht ?). As such, I do not think the gov will think of alternative energy because that will jeopardise the deal with the foreigner companies. As in any business, these transactions are not simply one-time deal but spread throughout the years to ensure that conditions are meet.
Note the lame excuses given by the official for price hike that carry no weight and no substance. It is clearly show they do it for profit reasons as they could not give a valid reason.
Big shame and disgusting on this government.
blade
i’m nt sure abt the feasibility of wind energy, but solar energy is definitely one area we can look at. being a tropical country, sg has sun all year round.. local institutions like NUS are already looking at the feasibility, though set up cost might be high with current technology.
at the meantime, hope the govt would look at how to cushion the impact of high electricity cost on its citizen. as mentioned, electricity generation is considered a public utility essential to all households and commercials (as mentioned by danial), it is best public owned and tightly regulated. As an essential public utility company, profit shdn’t be its priority. but the truth is disappointing, as point out by Leong’s article.
hope the govt will do sth abt it..
DrizztNeo
That is why i feel we might need an alternative government sadly to say our opposition right now are too weak. Many developed countries have started to place emphasis on the debate of using green energy as part of their election strategy while in singapore not even a word was said during the last election. The long term benefit not only in greater environmental protection but even in pure economics by saving at least millions- biliions of dollars would be lost if we only started implementing such strategies in 10-20 years time if ever.
To blade: the cost might be high right now but the power conversion efficiency and cost is improving significantly every year. In my opinion it is likely that by 2015-2020 solar energy is likely to become competitive with the traditional source of energy
sobri
I have a feeling that in the next General Elections, a surprise is awaiting the government. Many, especially those living in private homes are beginning to be agitated. Not only do they get the very least of whatever government offsets or worse still nothing, but each time a handout is announced, their property tax goes up!
I do find it perplexing too, that property tax in Singapore is not as transparent as it should be. Shouldn’t it be put up on the net, free of charge, so that anyone can check and compare his or her property tax against like homes in other places?
isa
sobri,
you think people who are living in pte homes will mind the increases?
Wouldn’t they think of the consequence of voting lousy quality into the parliament?
Ahgong
What national assets are you talking about? If you ask them, they will tell you that it is under temasek holding and that’s no longer considered owned by the country but every decision are purely based on commercial P/L.
Strangely, the elite management dared to explain that the tariff is pegged to the fuel oil future while 80% of our power generators are running on natural gas from indonesia. Why not reveal the chart based on actual natural gas price ?
Somehow i have this feeling that all this is preparation for the sale of power plants to foreign investors.The continuous price adjustment makes the power plants assets looks attractive to foreign players. ( Think temasek needed to patch big big lobang, else they won’t look good in coming FY report )
GRC? what does it stands for ?
== Guarentee Run-over Constituency
MMSMPMMC
Once again these agencies and authorities making lots of PROFIT and still shamelessly increase fare and charges. What happened to public service? These ministries and agencies are all profit pegged now and out to suck the citizen dry.
Lets complain more and it will be like the ERP saga succumb to public feedback and “fine-tune” to accomodate the complete senario.
Pay-And-Pay is really Pay-And-Pay…..
kahkia
Why sell “our” assets to foreign firms? Where will the money go exactly?
Maybe the govt has a bail out plan. They bail out, leave us here.
Clear eyed
Just one word to explain much that is wrong with society here – greed. To make as much $$$ as soon as possible and in whatever way – this is the driving force of the “leaders” here. Morality has gone to the dogs. Truth, justice, compassion and the intrinsic worth of life itself (except their own) have no place in their scheme of things. Heck, these words may not even be in their vocabulary.
Ahgong
where the money goes? Goes to help the “poor and needy” in US ???
hahahha
Ahgong, I don’t think the money goes to the “poor and needy” in US but to the “buddies”! Don’t help his American brothers, cannot leh!
Ahgong
Well then do you think the GST money goes to our “poor and needy” too?? hmmm…something to ponder on….
my80ctsworth
aiyah they take our money back in the form of utility bills because the whole country just got our so-called GST rebates mah…same carrot & stick tactic superbly used over & over again by ruling elite…
Daniel
“aiyah they take our money back in the form of utility bills because the whole country just got our so-called GST rebates”
AiYo … Isn’t the GST rebates get from the $6billions ++ surplus. How come still relate to utility bill ? The government cleverly put into stages so that it covers those surplus from March to now… see how clever ? What you getting is from first phase. Someone must be getting amnesia, haha. Want more GST rebates, yeah, it will be given as carrot months before the election.
Oh … speaking of surplus. How much is Singapore surplus from March to October ? Last time is $6 billions in March , now should be able to collect more ! Someone from opp party need to ask those expensive clowns now in the circus parliament…
CJC
Competition in the electricity market has motivated generation companies to seek more efficient ways of generating electricity, such as using natural gas. Today, about 80% of Singapore’s electricity demand is generated from natural gas. As gas becomes a competitive and major source of fuel for power generation, the gas industry is being positioned as a competitive industry to support competition in the electricity market. –EMA
http://www.ema.gov.sg/gas/history.php?cat=industry
Can someone enlighten me why are electricity prices pegged to crude oil instead of 80% natural gas?
Natural gas is much cheaper than oil. The cost of burning natural gas to produce the same amount of electricity is cheaper than the cost of burning crude oil right?
sobri
15) isa on October 2nd, 2008 5.02 pm sobri,
you think people who are living in pte homes will mind the increases?
Wouldn’t they think of the consequence of voting lousy quality into the parliament?
Isa………..you have also fallen into the same general thinking pattern of the govt and many people. those living in private homes are the most critical kind. Many too have worked hard to afford their homes………… and many too are retired. They get the least from all handouts……….yet may the most.
They also know that the will not be an opposition government considering the absence of such in Singapore. But they do know that it is important to send the right message to the ruling party. Think of Serangoon Gardens……. do you think any HDB heartland residents could summon up such a reaction to a `proposed’ domitory for foreign workers? Why do you think the MPs were so concerned?
blade
Tks CJC for the link.
Regarding “The cost of burning natural gas to produce the same amount of electricity is cheaper than the cost of burning crude oil right?” that u mentioned, can anyone verify this?
To Ah Gong, you mentioned about “Strangely, the elite management dared to explain that the tariff is pegged to the fuel oil future while 80% of our power generators are running on natural gas from indonesia.” I’ve found many references of this, but can anyone verify if sg has a contract with indonesia/m’sia/etc to get natural gas at a fixed rate, expired at a future date?
To all others with relevent info, pls post cross reference and links to support the call for electricity tariff reduction.
The 22% increase is simply too much, i hope all these info will find its way thru relevent channels to show our dissatisfaction. Otherwise, these info will still help the activists in Hong Lim Park in fighting for our cause.
Daniel
Testing …
Daniel
blade, try this,
Lucky Tan, a financial expert write about this.
http://singaporemind.blogspot.com/2007/12/electricity-tariffs-hiked.html
MMSMPMMC
The public utilities hike feedback from business MUST hit the local papers, I hope Today and TNP run some feedback from SME in Singapore on the topic that business is “pai tan” with the electricity hike. This way then there will be some “fine tuning” again.
We are seeing too many fine tuning of policies within this year. Everytime a policy passed with those elite thinking within their box has to be forced for fine-tuning after angry feedback from the public. What kind of policy setting trend is this? This means if any Singaporean simply just take the new policy as it is and pay-and-pay then there will be no fine tuning.
Singaporean, make your buck bang for all the public service charges you have paid. Voice out your concern about “money no enough”.
Ahgong
The electric tariff was pegged to the fuel oil prices in the past as all our power generators are burning fuel oil to generate electricity. This is pretty logical.
But now, majority of our generators are running on natural gas ? still valid to use fuel oil prices ?
Most likely you won’t be able to find the details on the importing contract. Usually the contract fixed the capacity/volume of gas to supply in fixed number of years. Gas prices i think will follow the market price, reviewed quarterly or monthly.
Daniel
“http://singaporemind.blogspot.com/2007/12/electricity-tariffs-hiked.html”
Daniel
Try this
“http://singaporemind.blogspot.com/2007/12/electricity-tariffs-hiked.html”
from LuckyTan, a financial expert with impressive analytical mind.
arthur
I thought the government claimed that selling off Singapore electricity assets will create competition in the electricity market thereby motivate generation companies to seek more efficient ways of generating electricity which in turn will benefit the consumers with lower electricity bill…. it was just a dream….
This cannot go on… how much can an average Singaporean cut back on his expenditure
ricecooker
Dear Mr Leong,
I’m glad you pointed out the similarities between HDB and the US sub-prime crisis.
For HDB, there might be an even larger crisis looming.
Some HDB flats are priced way out of the affordability of the masses. A $600k flat is targeted at a household earning less than $8k a month. In the US, they didnt bother to do credit checks when they lend the money to homeowners. Here, they “ensure” that you do not have the money before they are willing to let you buy!
Of course this policy will not have major repercussions if home prices continue to appreciate, and homeowners can sell their flats to pay off the loan. But property prices are not going to appreciate forever, and I don’t see how the $600k flat can be worth $800k with the economy going the way it is. When the $600k flat depreciates to $500k, HDB homeowners will find themselves unable to service the loan, and at the same time, face with negative equity on their flats.
Expect more foreclosures.
arthur
We pay the price when the objective of public housing become profit centred instead of people centred.
Nice post.
Daniel
“I thought the government claimed that selling off Singapore electricity assets will create competition in the electricity market thereby motivate generation companies to seek more efficient ways of generating electricity which in turn will benefit the consumers with lower electricity bill…. it was just a dream….”
Not until those foreign companies buying the so-called assets recouped their investment ASAP. They paying billions for it, and in this turbulent times, who don’t want to recoup ASAP ? And why will they care about public ? They are profit-orientated company not charity.
Ahgong
How residents going to opt for their own electricity suppler, i also blurred ! Just look at the cable TV sector, they are going to repeat the history again.
How to compare loans of HDB to Fannie & Freddie, esp HDB loans of yester-years?
HDB sells the flats at WAY ABOVE ITS COST…………..the land cost for HDB was (and still is) VERY LOW. It is just DECEITFUL accounting on the part of the PAP that HDB cost of land is marked to market.
As for the electricity rate hikes, these are no different from the other sectors – MRT/Bus fares, hospital charges…………you name it.
Why keep complaining, whining, ranting, belching or whatever……………..haven’t you people been doing that since time immemorial?
Contribute a small part of your pay to JLJ’s Reform Party or better still join as members………or contribute to SDP…………..or at least show up at their functions.
ErniesUrn
Why make a point by joining political parties?? JBJ said the power is in the ordinary people …all you (the Singaporean citizen esp. those in AMK) have to do in the next election is NOT put an X for the current system. That’s all. The more alternative voice there is in parliment, the more moulding change there will be.
Logicalman
It’s evident that the Govt does not serve the interests of the citizens, only her own. This present increase in electricity tariffs is totally baseless and unjustified. Apart from boosting the value and preparing for the sale of the last power company, this also sets the stage for the new owners to continue the trend. Introducing EVS will make it even more attractive & easier for the new owners to continue to reap from their investments in these companies.
Does the man in the street benefit from this in any way? One does not need to be a top scholar to answer that. This is probably part of the grand plan to continue to boost fiscal revenue and growth. With tweakings on the ERP, it’s possible that revenue from that end may be hurt in the long run, if people do indeed switch to public transport on a big scale. Hence the need to boost revenue elsewhere, such as GST, electricity tariffs, despite ample evidence that they do not need to.
Whilst the US is scrambling to help the man-in-the-street in the aftermath of the financial meltdown, our Govt has time & again thrown in a few miserable worms to haul in fishes from the people during difficult times. We do not really need big brains in the Govt, we need big hearts.
Somebody writing in response to the passing away of our honourable and beloved J.B. Jeyaratnam, said that when a person has every right to money but does not take it, that’s being noble. Nobility, now, that’s frighteningly missing from our Govt, and so is charity, morality and conscience. She is so used to bringing up rankings and statistics before justifying an increase in prices, bonuses, salaries and taxes here and there. So much like the child who brings back a good report card and expecting rewards for doing well. Rewards can be given on our discretion from time to time, but should not be taken as an entitlement. Come next GE, let’s teach this child a lesson that he will never forget. It’s time our leaders go back to basics, search their conscience and ask themselves what’s expected of them as true leaders.
As for utilities, it might as well be a wake-up call to help preserve this planet for our future generations. Don’t use more than what is necessary.
hope - no hope
makes no sense – the reply in the ST forum today. (Sat 4 Oct)
There is no pricing mechanism for natural gas so we MUST USE fuel as the pricing mechanism?
What is the cost involved in producing electricity? Again this sickening joke is like the HDB joke, where HDB gets to sell flats as a price that has no connection to actual costs and HDB / Temasek / PAP gets to profit at the expense of the common people.
What is the expected profits for Sing power given the 20+% increase in tarrifs – we need to know.
where does the money go after paying for the cost of natural gas?
Daniel
Logicalman,
this is a harbinger of things to come. When all local state electricity companies get sell-off, will we see more inflation ? You bet. After all, everything in Singapore needs electricity. They will find more reasons to increase transport, university fare, necessities, mall, shopping etc … Why do you think foreign companies pay such hefty price in billions for our electricity companies ? Gov betray the citizen’s trust, and that is what I feel about all these ridiculous transaction. What commericalization of electricity ? How does that benefit the citizen ?
Will more state asset be sold to foreign companies ? Why not ? Commerialization reason again. This gov seems to forget why Thaisin is overthrown but then Singaporean is chicken to do anything.
As usual, when you sense that there is a serious lack of accountability and transparency in gov’s dealing, you know we are in deep shit. Oh yeah, people says all these will come but by then how much is already lost ?
I doubt you will be able to find paper evidence of all these dealings eventually.
george says:
I fail to understand how it could be justified to raise electric bill because of the high price paid by SP for forward buying when 80% of the energy for power generation comes from LNG which is much cheaper!!
How is this not profiteering at the people’s expense? Elsewhere in the world this would bring people into the streets to mass demonstrate the obvious inequity of the situation.
CJC (#25):
Piped natural gas from Malaysia and Indonesia accounts for 76% of fuel used for electricity generation. The PAP government will start building a LNG Terminal in 2009 and only one LNG Supplier will be meeting all LNG demand in Singapore – BG Group Asia Pacific. This hardly qualifies as diviersification of natural gas sources in the commercial sense. As usual, consumers will be hit hard.
logicalman
a 2 percent increase in GST triggered off price increases of 50 percent or more downstream. An average of 21 percent increase in electricity tariffs, it’s not hard to imagine where that would lead to, given that electricity is a basic component in all commercial and economic activity.
Daniel,
you are probably right about the things to come. When USA struggles to put things right for the man in the street by taking back control of what’s deregulated beyond recognition, our leaders see it fit to continue to fatten their takings at our expense, by deregulating basic necessities on the pretext of driving down costs through competition.
blade
Utility companies like sing power r natural monopolies. even if they’re able to drive down cost substantially, we can little expect them to pass on the cost saving to us.
Rushking
We complain that 21 percent increase in electricity tariff or charges is a mind-blowing “Quantum Leap” ?? Or a real killer?
But before we criticize, let’s be fair to the government – their job is not easy you know. First there is the F1 where they spent $150 million. Then there is the Beijing Olympics where these ping-pong players got to be paid something like $200k each for silver medal win. All these glory and national pride cost money, and it is not cheap you know, so how to raise all these money to pay for all these??
Then let’s digress a little to the increase in Newspaper prices – only 10 cts more per day for Straits Times – except that Saturday’s is 20 cts more because on Saturdays they got to cut down more trees to give you one damn heavy stack of papers that you mostly don’t need. The real problem now is with the Electricity costs up 21 percent from October, how can SPH “tahan” because the printing machines eat lots of electricity. So we must not complain about the immediate 10 cts or 20cts increase per day because SPH will real soon come back to tell us the Electricity costs will have to be passed to the readers again ! Good news reporting is not cheap you know. Also, the reporters need a pay increase because they got to pay higher home electricity bills – and so on and so on until the inflation monster eat all of us alive.
patriot
Many Singaporeans are asking themselves whether they will be able to survive, amongst their greatest worries are whether investors and tourists will come in view of the high costs and still rising. And we do not understand why essential goods and services seem to hike so very frequently though the Operators are making tons of money. Is it not possible to keep profit margins lower to stabilize their pricings to consumers?
Despite the ever falling low pays of local menial workers, their employers gave their(Singaporeans) jobs to foreigners the moment they(employers) are approved to employ foreign workers. Poor(financially/qualification) middle-aged and above Singaporeans face great difficulties finding jobs, many resorted to illegal hawkings of fruits, audio/video disc, duty unpaid cigarettes and runnings of illegal gamblings. Many are literally forced into illegal activities by circumstances beyond their controls.
The Reason Offered for the 21% increase in cost of electricity supply to local consumers peg to oil price fluctuations is indeed ridiculous when the generation of power is 80% natural gas driven as disclosed(in discussions here) at a much lower operating cost.
Singaporeans have always been very compliant but many commoners are driven to despair by costs of livings and there are dangers that most of them may not be able to clear the wall before them, if driven up the wall so to say.
patriot
blade
this is sing power financial statement for 2007/2008: http://www.singaporepower.com.sg/pdf/pdf0708/SP_AR_2007_Financial.pdf
those who can read it might wanna look thru it and comment on it.
blade
These are some links to reports, that show sg is buying natural gas from indonesia:
Herald, 1999: http://www.iht.com/articles/1999/09/22/singas.2.t.php
SP Power, 2002: http://www.singaporepower.com.sg/publish/PR/Files/Approve/PR17_7243.html
energy use, a comprehensive report on indonesia’s gas transmission:
http://jakarta.usembassy.gov/econ/natural_gas2003.html
(seems to suggest rate might be fixed at time of negotiation of contract)
Jarkata Post, 2008: http://www.thejakartapost.com/news/2008/04/16/ri-secures-best-deal-gas-contract-singapore.html
EMA news on LNG procurement: http://www.ema.gov.sg/gas/gas_lng.php
HOpe all these help.
tiredsingaporean
I observed that everythime when there is a price increase in certain garment related issues which most of them are of course unjustified, all they do was just tell you some bull stories and they just go ahead and collect their $$$. They dun even give a damn on what the citizens think. All these has been happening once too many time already, not a new thing anyway. So,. . . . what are you citizens of Singapore going to do about this????
blade
tiredsgrean, it’s shd be wat are we singaporeans gg to do abt tt. sg belongs to each and everyone of us, n we shall decide how sg shd be run.
the govt haf bn talking abt a govt tt’s open to public’s views. i notice tt some pts brought up by our citizens might be highlighted by the media, but the public is usually “pacified” after a unsatisfactory reply by the authority.
i was an “obedient” citizen, who dun usually speak up even when unjustice is done. but the recent price hikes are unbearable. the electricity tariff hike, an essential utility, is the limit, esp when sg power is making so much profit every year. i’m sure our people feel the pinch as well.
u asked wat can be done?
Firstly, we can create awareness to the public on the price hike (if they not already know), and study the effects on our people. We cant just rave and rant on the issues, but also to find support for our cause.
Then, we can bring it up to the relevant authorities. It’s pointless to get provoked over the incident, instead when we make our voices heard, we propose wat can be done and should be done to help our citizens. (Reduction of tariff is one of the option.) We present what the majority of the sg’rean think.
I hope the authorities will listen to our people and understand our people.
To create awareness and getting feedbacks from the public, one of the possible mean is thru talk at Hong Lim Park. I do hope someone could empower our people at Hong Lim Park, just like what our columnists Mr Leong and others have done for the recent transport fare hike.
I’ve proposed posting links to reports, statements, and your point of views for the incident. All these will definitely help in our fight for our cause.
sobri
So much has been said about the unexpected increase of electricity rate of 21% at the time when fuel price is tumbling………….especially in the press like The Straits Times.
Has anyone actually calculated the percentage increase of The Straits Times itself?
Interestingly, there seem to be no complaint about that increase!
patriot
May I add here that the writings here are for the enlightenments of readers and engagements with our leaders.
I am sure the Leadership monitors and read TOC and if it takes no action to refute the many(too many in fact) allegations here, I take it that it means the allegations stand. When the complaints are true and legitimate and no action is taken by the Leadershipship to rectify them or make amends, it is clear signs of neglect, negligence and failures of duties by the Relevant Authorities.
When the Leadership is mandated(by the people it says) to take care of the country and its’ citizens, showing apathy and fleecing its’ people are the greatest sins that it has(as a duty/propriety) to avoid at all cost.
We maybe powerless to fight the Oligarchy, HOWEVER, WE CERTAINLY AND DEFINITELY HAVE THE DUTIES TO EXPOSE INJUSTICE, INCOMPETENCE AND IMMORALITY.
patriot
patriot
Hi Moderator(s);
please help me to correct a spelling mistake in ‘moniters’ to monitors, if t can be done.
Many thanks from: patriot
Rushking
It beats me – I just cannot figure out how the govt calculate or justify this 21 percent hefty increase in our electricity bills. I feel the pinch and this really hurts my pocket like most people here. The hawker food centres will also want to increase prices because now their electricity bills getting more expensive and so on, and so on….HELP !!
21 % increase is really no joke man. It’s like being hit by a big truck when you read about such an increase in the papers. What has this to do with selling Tuas Power Station to China and Senoko Power Station to Japanese bidders ?? Will this increase mean more profits to these new foreign owners or what?? Can the govt consider instead to stagger the increase gradually so that we, the ordinary folks, can digest the higer costs to our living – so we can breathe a little??? And should the govt calculate the electricity costs based on the drop in recent oil price instead??? Oil price is going down so how come electricity price is going UP ??
If the 21% increase is pegged to the oil price fluctuations – I need to ask : the oil price today has dropped to USD96 to USD 100 per barrel from the High of USD147 per barrel recently but Singapore is increasing electricity charges instead of dropping the charges???. Everywhere I am reading about the fall in oil price happening now due to the Recession in the USA which means drop in oil consumption which means cheaper oil costs??? Can someone help to explain why this electricity costs increase and so fierce increase of 21% ?? Maybe our govt has very good reasons which we may not know??
blowme
This government is testing the citizens’ tolerance for pain and hardship.
So far most citizens seem to be able to endure the pressure.
Perhaps this govt needs to find out the citizens’ threshold and at the same time collect lots of money for their coffer.
The bright side to all these increments is that the pro PAP supporters will also share the same misery.
victor
wow…
ammmm….
GOv increase electricity fees to 22% but actually was 23.54% if u check…
so the purpose is to tell WE to DON USE WATER AND ELECTRICITY anymore right,..same as ERP method..
if GOV WANT WE SINGaporeans like tat.
i think goV should
INCREASE
1)2000% of electricity and water fees.
2)ERP increase to $50,when u enter in..
3) fuel =$3per litr
4) COE to 50K per car.
STILL HAVE MORE …………………………………………………………………
so singaporeans REALLY THANK THEM…
AND THE COMING ELECTION,,,HEHEHE>>>..
“GIVE RID OF SINGAPOREANS SIGHT”…
gov solve many problem just to INCREASE FEES FEES FEES…
AND THEY SAY,we HAVE CLEVER PP TO OPERATE GOV SYSTEM..
so i really see clever pp operate sing…AHHAHA.
sing gov V RICH,BUT CITIZEN V POOR,,,
GOV salary V high can leh,u guy AR,DON CARE LAH>>….<<>>
AND DON ANYHOW VOTES TO ANY PARTY,,,,SHOULD THINK TAT WHICH PARTY IS GOOD FOR THEM….THEN THEY VOTE TO TAT PARTY..
increase INCREASE INCREASE…
HAPPY GOV,UNHAPPY CITIZEN…DON CARE!!hahahs…
WE PAY TO GOV PP SALARY,
SO GOV SHOULD FOCUS ON DEVELOP THIS COUNTRY,,
NOT TAKING OUR MONEY TO INVEST OTHER COUNTRY.and doing business..
they invest other country,we did not have any benefit.!!
IS it NOT FAIR TOWARDS THE SINGAPOREANS AND BUSINESS MAN..
JUST BENEFIT TO ,………U GUY USE YR BRAIN AND THINK BA…
STAND UP.STAND UP FOR SINGAPORE!!!!!!!!!!!!!
STAND UP.STAND UP FOR SINGAPORE!!!!!!!!!!!!!!!!!!!!!!!!!!!!
from:
@young generation@
Whichever way you look at it, I say SG. is a police state in very subtle forms. The govt. has all the facts, the media, etc in control. They can manipulate all things, having the power and money to buy the best brains.
Ahgong
I feel that the LHL has been stuck in a dillema. He’s always trying to prove that he can implement unfavorable decisions and ideas. BUT, in his brain lock, he has totally forgotten about people.
Look at the recent policies that his team make, kept repeating the same mistake, thinking the ordinary people are stupid. Whenever any policy going to be implemented, they will pretend to let some low level officials to leak out some news. Actually everything is set. Then, let people make noise abit. Then giving some sweeteners, rebate. Then annouced the already decised policy.
Like GST increment, GST increment is for permant. They giving u that $200, $300 dollars just to let you accept their decision only. In the long run, they knew that they are going to profit much much more. what are $200 $300 ?
Similarly ERP case. They say cutting ther road tax, misc tax, but they knew that they are going to profit much more from the ERP toll. These short term losses is ok to them.
So, same case as electric tariff. They give u some money cos they knew they will get back sooner or later.
I think we better change a better player next election
tmq
The increase in electricity rate is unjustified. They have already made big profits from current rates, moreover the price of oil is forecasted to drop due to the current financial crisis(according to articles in the papers). The people who are running the power companies and the regulatory bodies have explaining to do. They gloss over it by offering subsidies……..justify the increase first, forget the subsidy. To those in charge, do not try to get fat bonuses at our expense…this is neither clever nor creative…. just plain sandbagging. Do something to help us manage our current cost of living…….if you cannot do it, let others run the shop.
Kruser
If i am not wrong the price of natural gas is tag at a premium price because of a water supply agreement our govdement have sign with our friendly neighbour.
Ya i am still thinking why they increase the tariff but still cant find a good reason to justified that. You see the power they have on he media to prepare the public for all the changes they want to make? For example, making more babies all the channels are now showing about babies. Fustrating? yes i believe all of you feeling it. Coping with utilities price increase now they have a program to show u how to save electricity. Get my point? Generally, if you see the Singaporean interviewed on NEWs they all say its ok although it is a bit painful. So that really sum up the views of typical Singaporean. Just like they are gg to increase the home phone line prices, Singaporean are generally ok with it because on TV they want to look good. And that give all the impression of well that ok wat.
Anyway i am abit saddened by the decision the gov make it seem to be out of control. It seems that they want to forced true Singaporean to be out of the country as they have predicted as now there is a series drama on the problem Singaporean face while they are living in foreign country sending this message clear to all Singaporean to think twice before leaving the country. Sigh…..how long are we gg to be like this?
Up, up and away
“64) Kruser on October 7th, 2008 2.05 pm
Sigh…..how long are we gg to be like this?”
As long you can tahan, they will give it to you lah. Supply and demand at work in its finest form. The mechanism is in place to ensure that all like-minded disagreements are not amplified to a level that connotes wide spread disagreement.
The magical hand (words) of MSM will make you feel that is alright to “enjoy” the “masochistic pain” of price increases.
Have you ever wondered the peculiar behaviours of some Singaporean customers – that they can concur so happily and speak so agreeably on price increases especially when it is going to hit their pockets. Hopefully the pockets are still around after withstanding the burn.
blade
for those who are interested in the construction cost of an average standard high rise appartment in singapore, i have found a source (Davis Langdon and Seah Singapore), dated 03/03/2008, which compare it with other countries.
http://www.bca.gov.sg/keyconstructioninfo/others/dls_intl_2q07.pdf
if we take the cost as stated, US$970 psm (ie S$1455 psm), a 5-room flat of size 110 square metre would cost S$160k to build.
tiredsingaporean
Our Mr Mah says that the HDB flats are heavily being subsidized by the garment but how come an average 5rms flat now cost around 300K +, luckily its heavily subsidized or else must live on roadside instead.
george
Kruser I am one of those Sinkaporean who had voted with my feet by means of a one way ticket to England.Private life is the same everywhere except in UK, there is true democracy and freedom of speech. I worked hard and make use of the opportunities here. There are lot of educational opportunities here for one to part take and quality of life here is mile ahead of Sinkapore. One do not fear to speak one mind and most importance of all the legal system here is fair. Even the police is not above the laws. PAP ( Pay & Pay) regime is a crook regime as bad as those in China. Except this regime used the judicial system to silent all oppositions by making potential opposition candidates bankrupt and hence disqualified to run for election. I had not return to Sinkapore since and will not return until the day LKY goes to meet his maker. With him out of the way, Sinkapore will become Singapore again and people will truly exercise their natural rights as a citizen. God bless.
RH:
1. Another excellent article! Thanks TOC!
2. Briefly, the LIE KY govt has evolved a Fake Economy in which normal economic functions and processes are all miniscule and over-leveraged into Good Looking statistics.
3. For example, Singapore’s so-called status and operations as a LIE KY boasted “financial centre” or “hub” are mostly due to its SWFs operations. Take away this SWFs factor and Singapore is no financial centre.
4. Another example, every time our few pharmaceutical factories shut down for routine cleaning, this instantly lowers our manufacturing statistics! This points to a fake economy where a few factories account for so much ‘output’. It means the economy is very, very, tiny so a swing in a few factories’ output affects the whole economy.
5. So what is LIE KY’s Real Economy? It is Robbing The People. Your excellent articles above prove that. Every means and every scheme to milk the people is mercilessly applied and exploited. A HDB 4-room that costs ~S$30,000 to build costs us >S$300,000! Some ~35% of all salaries are withheld into the CPF to build up the SWFs accounts so LIE KY gets Royal Treatment everywhere he goes, since he can patronise with $b investments for the privilege.
6.Andy XIE has written that Singapore’s economy is mostly money-laundering from rich Indonesians and elsewhere [including Burma drug lords]. Together with SWFs operations and casinos, Crazy Horse live porn shows promoted by LIE KY, and a few showcase MNCs operations lured here by decades of tax holidays and freebies incentives, this about explains LIE KY’s Real Economy.
7. Ultimately, this is all a “Golden Period [LIE KY] BUBBLE” that cannot last. All the monies robbed from the people eventually has to be returned 1 way or another. Some through CPF withdrawals when allowed — and the withdrawal age is regularly pushed back to delay the Day of Judgment. Other ways include the inevitable Return of Money To The People when they become too broke to pay for electricity, hospital bills, meals. When few are thus desperate, they can be ignored but when the critical mass is reached, the Return of the People’s Monies is inevitable. Already, the Return of Monies is forced upon the LIEgime as seen in the ever-growing Bonuses, Subsidies, Vouchers, etc. Another sign of the inevitable Return.
8. Once this Money Returns, the LIEgime has no money left to play with, the SWFs dwindle and the world and history will witness another Bubble Burst.
9. It was all just another, classic Bubble Economy built on air and falsehoods, Looking Good while it lasted but the Bursting inevitable. The rapidly growing population demographics of postwar Baby Boomers now ageing, is the beginning of the end. Importing >million foreigners is another sign of the desperate attempts to stave off the inevitable. This has its limits due to the tiny size of the islet.
10. LIE KY created a Bubble. That’s all he has achieved. He has been consistently cheating elections to stay in power to pay himself, his son, cousin-in-law and cronies millions. One vast parasite organism feeding upon the people. But the Day of Reckoning will come as it always does. Allahu Akbar! as this is Hari Raya today.