$1 billion profit, so electricity tariffs raised 22%

SP Services has announced that it has raised electricity tariffs 21.89% from 1 Oct to 31 Dec 2008. The Online Citizen’s Leong Sze Hian has pointed out that SP Services’ parent company, Singapore Power Ltd, made a profit of $1.086 billion in 2007. I checked out their website and indeed this is true.

They made over $1 billion in PROFITS and they are increasing tariffs by 22%! And all this when oil prices are actually decreasing.

Of course, since it is not useful for our power companies to use the current oil prices to justify the increase, they are using the “forward fuel oil price”. This is the price agreed between the buyer and the seller for delivery of the oil at a specified future date, in this case 3 months.

As with the Public Transport Council (PTC) and ministerial salaries, the Energy Market Authority (EMA) is using this ridiculous formula to justify price increases.

It’s really shocking how the EMA has gone to the hilt to defend the price increases of the company they are supposed to regulate. But on closer examination, it’s not all that surprising:

– Singapore Power made $1 billion in 2007, much of it from Singaporeans’ electricity fees.

– SP is in turn 100% owned by Temasek Holdings (as are the two other power companies, PowerSeraya and Senoko Power).

– Temasek Holdings is owned by the Ministry of Finance.

– EMA, the energy market regulator, is a statutory board under the Ministry of Trade and Industry (as is the Competition Commission of Singapore, which is supposed to prevent cartel-like behaviour).

I think everyone is having a jolly good back scratch, except us ordinary citizens.

Something is seriously amiss when a power company can make $1 billion in profits and still raise charges by 22%. It is a classic example of the profit-driven culture that our government is run on. I really don’t know how much longer Singaporeans are going to stand for this kind of nonsense.

Author: Gerald Giam

Gerald Giam is the Member of Parliament for Aljunied GRC. He is a member of the Workers' Party of Singapore. The opinions expressed on this page are his alone.

26 thoughts on “$1 billion profit, so electricity tariffs raised 22%”

  1. So glad this was pointed out. The hike is so ludicrous yet all we can do is just sit back and ‘twun’ (swallow it)…its just going to fade away…Can our opposition parties be more bold to come out and make noise about such nonsense that’s just growing in enormity as highlighted…Speaker’s corner, Parliament, blogs, spam SP and Min Finance, whatever…letters dun work anymore…all they elicit is just ‘educated’, ‘scholar’, MBA type replies that are purely out to justify and not assuaging peoples’ burdens…can we have someone with a little bit of the fire (and sharpness) of JBJ to just speak out fearlessly…

  2. Singaporeans deserve it.

    Want to vote for PAP masters, conservative bigots, this is what you get.

    Liberals evil, did I hear? Lol


  3. Gerald

    All corporations need to make a profit. If you were to probe further, part of its extraordinary eg selling of property. Further, the profit is that of 2 countries operations.
    Unless you expect power companies to be not for profit organisations

  4. My main question is why is tariff pegged to oil price when most of the electricity is generated by burning NATURAL GAS!

  5. Their perspective is, so what if oil prices are decreasing now. Prices have increased and decreased over the previous decades but prices in Singapore had never decreased but only increased.


  6. Hedging the forward price of oil is not something that only Singapore Power does.

    They are the reason airlines did not suffer from high oil prices for many months.

    It is at least plausible that, if not for the price hike, SP would be losing money in 2008 and/or 2009.

    Furthermore, all companies raise prices in larger, spaced-out increments rather than smaller, more regular increments. With the 22% hike they likely won’t raise tariffs for a few years, even though costs rise every year.

  7. Ken Na Sai ! PM Lee say in his Labour union speech some years back that PAP does not stand for Pay and Pay.

    Dont believe him ! How long can Singaporean Tah Han !

    To be frank ! Very Very Long ! Because we the citizens of Singapore vote for Him !! Why ? We are kaisu and kai see that Singapore will die and you lose your job ! Then again, aren’t we losing our job on a daily basis with more and more foreign workers ? So both side also die ! Think about it when you vote for Pay and pay next time !

  8. “..-Singapore Power made $1 billion in 2007, much of it from Singaporeans’ electricity fees.

    – SP is in turn 100% owned by Temasek Holdings (as are the two other power companies, PowerSeraya and Senoko Power)…”

    It is called ‘stealth tax’. In the absence of any effective opposition party, the oligarchy in place since the birth of the country has no fear of being voted out in the next election. They can hike the stealth tax-the electricity tariff to even 50% with impunity.

  9. You know what this is going to lead to? More students will go to McDonalds, coffee joints, airport (if they still alow), libraries, to study–use their lights, air con, and power sockets. Sigh. Things will get even uglier there.
    Then whose fault will it be?

  10. Fundamentally, I believe it is a policy failure of the PAP government to turn providers of essential services on a national level into profit-oriented enterprises.

    With SP as a for-profit company, their primary focus is to make money. Coupled with the fact it is a company operating with monopolistic power, it can price their services anyway they want. So, it is not surprising they can make $1 billion profit in 2007. It is also not surprising that they could accumulate past profit to be able to acquire Australian power companies.

    While such a policy is a success turning out profitable companies, it did not benefit ordinary citizens one bit.

    How did any ordinary citizen benefitted from the $1 billion profit SP made in 2007 ? Will ordinary citizens benefit from the investments SP made in Australia ?

    In fact, the regulator EMA will continue to support SP’s pricing decision as the govt will argue that it is fair for SP to achieve a certain ROI/ROA.

    We should be asking ourselves : What is the benefit to ordinary citizens with such a govt policy to turn providers of essential services like electricity into a for-profit enterprises ??

  11. i would like to go on strike for this rubbish.

    but lets face it, nobodys got my back. cause in this country, singaporean hates singaporeans.

  12. Most of Singapore’s electricity is generated by Natural Gas from Indon, which was negotiated at a fixed 50 year price. So why are we paying more?

    The price of oil has fallen dramatically since 3 months ago, where it peaked at $150. Its now closer to $100. So we are paying for someone’s mistake in hedging?

    EMA and PTC, there is no transparency. No accountability.

  13. Wang,
    In addtion to SP Power’s billion dollar profit, the 3 gencos each also earn a profit of $200 -300+ million.

    They rightly deserve an appropriate returns on their equity. But a total of about $2 billion seems excessive in the light of current oil price and electicity tariff trend. If only more comparative finanacial data and analysis are available to gauge that. Is there somewhere in the trade who can throw some light.

    It seems that the current tariff setting has a timing gap of like 6 months before falling market fuel prices get adjusted in the electricity tariff charges. Crude oil has fallen in recent months by 50-60% from nearly $150 to $90 per barrel. Yet latest tariffs see a rise of 21% while we all would logically expect to see a fall to begin like in HK. If this is true, SP Power and the gencos are making extraordinary profits and consumers are paying for that, ie, we are being profiteered.

  14. wah lau, people…dont get angry.

    this is all done for our good, so that no one can “do you in”.

    If they dont raise the tariffs, how else are they going to raise funds to acquire all the power plants around Asia and beyond? Its such a quick and easy way to raise money.

    and then – once we have control over all the power plants in the region, then we have control over our neighbours.

    Think about it – we now largest shareholders of the last remaining powerful banks of the world, Singtel owns many of the telcos in the region, and soon, we’ll own the power plants too. SIA slowly buying up shares of airlies, and no doubt PSA will start buying ports too. i waiting for the day when Mediacorp/SPH will start competing with Rupert Murdoch or Ted Turner. Our casinos will also be better than the rest of the world – Macau only has F3, we have F1!

    Then Singapore will continue on its path of Golden Age. We may be a red dot, but no one is going to mess with this red dot.

    it is all for our own good lah. so dont complain. think about the bigger picture.


  15. aiya you all make so much noise but in the end still do nothing. keen is the worst talk so much and dare to ask other ppl to stand up for you. really no face! not happy go live somewhere else!

  16. Guys, from my past experience in Singapore Power, it’s not the regulator EMA supporting SP’s pricing decision. Instead, it’s the other way around. Just like what Rambling Alcoholic has said, EMA and PTC, there is no transparency. No accountability.

    Anyway, I personally do not agree with the price hike as I’m also a paying electricity consumer. I mean, what’s the point of it? They didn’t specifically mention its real reason though.

  17. Can’t afford electricity?
    Use nuclear energy.
    Marie Antoinette would have approved this statement were she alive today.

  18. Anonynomous Oct 7

    Are you refering to S$ total profit or what investors or even ordinary persons in the Streets which return on equity(capital).
    The profits may be large in S$value but on ROE and ROA, they are reasonable.


  19. I think something is very wrong with the Singapore culture and the workings of its “open” economy. Economic advancement is a means to improve the material welfare of the people, not an excuse to squeeze out more money from our already empty pockets.

  20. Get an education first and learn to rule. Otherwise, you guys are nothing but a bunch of hot air.

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