Senoko Energy reaches out to government for financial aid
Singapore
SINGAPORE power generation company Senoko Energy is seeking a loan and other support from the government amid the overcapacity in the local power market.
The company is asking for about S$100-S$200 million to cushion its weak financials, according to a Nikkei Asian Review report on Friday.
Senoko said in a statement to The Business Times that "the difficulties of the power generation sector in Singapore... are an industry-wide issue and not a company-specific issue."
The number of power stations in the Republic burgeoned in recent years, encouraged by incentives as Singapore pushed for facilities fired by liquefied natural gas.
Citing sources, the Nikkei report said weaker-than-expected demand is also exacerbating the supply glut.
In addition to loans, Senoko is pushing for the authorities to develop a framework where it could be assured of revenue under long-term contracts, regardless of plant utilisation, Nikkei said.
Notwithstanding its appeal for financial aid, Senoko's statement said there are signs of improvement in the market thanks to increased demand and reprofiling of gas contracts, as reflected in the higher prices in the electricity futures market for 2020.
This was supported by the Energy Market Authority (EMA) in a statement to BT on Friday night. It said: "While supply currently exceeds demand in the power generation market, we have seen strong growth in demand from new and emerging electricity-intensive sectors such as data centres. At the same time, the gencos are retiring their older and inefficient generating units." As the industry regulator, EMA said it has taken steps to help alleviate the situation, as well as introduce measures to provide cost savings to the gencos and promote energy efficiency
For example, EMA launched the Genco Energy Efficiency Grant Call in October 2018 in a bid to help gencos to be more energy efficient and competitive.
Senoko said it recently completed a refinancing in May, "which shows the confidence that our shareholders and lenders have in the future of the company. As a result, we... are in a much better position to continue serving our customers..."
Weak market conditions pushed another firm, Tuas Power Generation, to a net loss of SG$167 million in the year through December 2018. One reason for the dire straits water treatment company Hyflux is in is because of its entry in 2016 into the crowded power generation business.
