SINGAPORE, March 5 — Singapore’s energy regulator has cautioned that rising tensions in the Middle East may lead to higher global energy prices, which could in turn affect electricity tariffs locally.
In response to questions from CNA, the Energy Market Authority (EMA) highlighted that about 95 per cent of Singapore’s electricity is generated using imported natural gas.
Around 57 per cent of these imports are liquefied natural gas (LNG) sourced from various regions, including the Middle East, while the remaining 43 per cent comes from piped supplies from Malaysia and Indonesia.
EMA said most consumers are shielded from immediate fluctuations as many are on fixed-price retail contracts or pay the regulated tariff set by SP Group and other retailers.
However, it warned that “some consumers may see an increase in electricity prices at the point of retail contract renewal, if fuel costs remain elevated at that point.”
For households on the regulated tariff, prices are reviewed quarterly based on average fuel costs from the first two-and-a-half months of the preceding quarter.
EMA noted that sustained high fuel costs would result in higher tariffs in subsequent quarters.
The advisory comes as the Middle East enters its fifth day of conflict following US and Israeli strikes on Iran, which have triggered retaliatory attacks on energy infrastructure in the region.
In Oman, ports and fuel tanks have been hit by drones, while in the United Arab Emirates an oil storage facility sustained damage from debris after a drone was intercepted.
Gas prices have surged since Qatar halted LNG exports, which account for about 20 per cent of global LNG supply, due to the escalating conflict.
Iran also claimed “complete control” of the Strait of Hormuz on Wednesday, warning that any ships attempting to pass could be attacked. The waterway is a crucial energy route, handling around 20 per cent of the world’s seaborne oil.
Brent crude was trading at US$83.76 (RM330) per barrel as of 6pm on Wednesday, marking its third consecutive day of gains.
EMA noted that a similar spike in gas prices in 2021 had severely tested Singapore’s electricity market, prompting the authority to establish contingency measures.
These include a standby LNG facility available to power generation companies (gencos), mandatory fuel reserves based on generation capacity, and a diesel stockpile for backup.
In 2023, EMA also introduced a temporary price cap mechanism as a “circuit breaker” during periods of high volatility in the wholesale electricity market.
“These measures help secure fuel and electricity supply and mitigate price volatility,” EMA said.
“We will continue to closely monitor global developments and work with industry partners to safeguard Singapore’s energy security.”
