WHILE the government can help to smooth out "extreme fluctuations" in energy prices, it is not tenable for the authorities to subsidise electricity consumption in Singapore, said Second Minister for Trade and Industry Tan See Leng in Parliament on Monday (Apr 4).

"Singapore is not an energy producer… over the longer term, electricity prices have to reflect the costs of procurement and production," said Dr Tan during a ministerial statement addressing concerns on inflation and rising business costs.

"It is not tenable for the government to subsidise electricity consumption in Singapore in order to keep domestic electricity prices lower than the global prices, which Singapore must pay for energy in the first place," he added.

Consumers must therefore be prepared to face higher electricity bills over time, especially if the price of oil and gas remains elevated, said Tan.

On the government's part, it will continue to diversify Singapore's energy sources to make the power system in the Republic less susceptible to fuel supply shocks, though such measures will take time to bear fruit.

For instance, plans are underway to multiply solar deployment in Singapore by 4 times to generate at least 2 gigawatt-peak of electricity by 2030, said Dr Tan.

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The government has also taken the lead in accelerating rooftop solar development through the SolarNova programme, which aggregates demand for solar systems across the public sector.

The authorities also intend to import up to 4 gigawatt of low-carbon electricity by 2035 to decarbonise the power sector and reduce the Republic's reliance on natural gas.

"Beyond this, we will continue to explore other low-carbon alternatives such as hydrogen, geothermal and even nuclear energy, which may have the potential to improve our energy security and energy resilience," the minister said.

On concerns about the security of key commodities, Dr Tan assured that the government has in place measures to ensure that Singapore has adequate fuel supplies, including petroleum. However, he did not share specifics of the plan, citing security reasons.

As for concerns over rising costs, Dr Tan said being more energy efficient is one way businesses can manage business costs. The government will assist businesses which are exploring ways to make their operations more sustainable during this period.

It is studying various options, such as expanding the range of supportable solutions or making it easier for businesses to apply for grants.

"By being more resource efficient, businesses can better deal with unexpected, exogenous shocks that come our way," he said.

Saktiandi Supaat (Bishan-Toa Payoh GRC) asked if the government would consider introducing a lower tier under the Temporary Electricity Contracting Support Scheme (TRECS) to support smaller small and medium-sized enterprises (SMEs) struggling with rising electricity prices.

In his response, Dr Tan said the current approach taken by the government is a nuanced one which offers both SMEs and larger enterprises the flexibility to choose between different options based on their needs.

For SMEs or larger companies which do not want to go on a long-term fixed price contract, there is TRECS, he said. Otherwise, Sembcorp Power and Keppel Electric offer long-term fixed price plans ranging between 6 months and 3 years to consumers with an average monthly consumption from 4 megawatt hours (MWh) to 50MWh. 

"If you're saying you want a separate, lower tier, then the price differential has to be subsidised by someone," Dr Tan said, adding that it is difficult for the government to subsidise energy consumption as it would only encourage businesses to consume more.

"We've continued to ensure stability, security, consistency of the supply. The pricing part, what we've tried to do is also to negotiate on their behalf... depending on the needs of the different companies."

Workers' Party MP Jamus Lim (Sengkang GRC) asked if the government would introduce targeted measures for households and small businesses which use or run commercial vehicles, given that private road transport prices were up 17.2 per cent year on year in February. 

In his reply, Finance Minister Lawrence Wong, who delivered a separate ministerial statement on Monday, said some companies have already started to make their own adjustments to the rising costs. For example, some private-hire companies have raised their fares, while taxi companies have continued to provide rental concessions to their drivers.

This way, the costs are being shared with consumers, said Wong.

"Let's monitor the effects of all that we are doing and how it percolates through the economy before we decide on our next steps," he said.