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Senoko Energy clarifies it does not need government financial aid

A Senoko spokesman told BT it is "unlikely" the utility firm will need to draw down on any loan, given that it had just refinanced in May.

A SPOKESMAN for Singapore power generation company Senoko Energy has clarified that it does not require additional funding from the government in the “foreseeable future”.

This refutes a report by the Nikkei Asian Review last Friday about Senoko asking for a S$100-200 million loan and other support to cushion its weak financials amid overcapacity in the Singapore power market.

The company spokesman told The Business Times (BT) this week that the utility firm does not need further government aid, given that it achieved positive cash flow in fiscal 2018 and also recently refinanced.

Some power generation companies in Singapore including Senoko had earlier explored with the industry regulator, the Energy Market Authority (EMA), the possibility of loan facilities to help sustain and grow the power generation industry, according to the spokesman.

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But it is “unlikely” that Senoko will need to draw down on such a loan so soon after completing a refinancing in May, she added.

The utility firm has also secured additional working capital facilities from its shareholders and new working-capital facility lenders.

“As a prudent operator, we are continuously reviewing how we can optimise our capital structure and tap on additional sources of funds, even if there is no immediate need,” the Senoko spokesman told BT.

Aside from loans, the Nikkei report stated that Senoko is also pushing for the authorities to develop a framework to guarantee revenue under long-term contracts, regardless of plant utilisation.

In response, the spokesman said that all industry stakeholders including Senoko are working with EMA to review ways to incentivise power generation companies to maintain their generation capacity reliably.

This includes looking at initiatives such as a forward capacity market, which has been implemented in countries such as the US, the UK and France.

Senoko added that it is working with EMA and other power generation companies to resolve the root cause of the depressed market, which has been driven by overcapacity and excess gas.

Despite the challenging market conditions, Senoko has been performing well, the spokesman said.

Although the company’s net loss had widened to S$400 million for FY2018, this was “not performance-related” and was instead due to a decision to impair some assets and inventory, she added. While the impairment led to an accounting loss, it had no impact on Senoko’s cash position.

The outlook for the Singapore power industry also remains positive, according to the spokesman.

EMA told BT on Friday that while supply currently exceeds demand in the market, there has been strong growth in demand from new and emerging electricity-intensive sectors such as data centres.

“At the same time, the gencos (power generation companies) are retiring their older and inefficient generating units,” the regulator noted.

EMA said it has taken steps to alleviate the situation, as well as introduced measures to provide cost savings to the power generation companies and promote energy efficiency.