- The Ministry of Trade and Industry (MTI) and the Energy Market Authority (EMA) are creating a centralised gas procurement framework for Singapore’s power sector.
- An entity named Gasco will be established to manage and unify the gas needs of power generation companies.
- The new procurement plan aims to improve the negotiation power, economy of scale, diversify gas sources, and guarantee stable prices and supply.
Understanding the Current Gas Procurement Framework
Singapore is a small country with big power needs.
Natural gas powers our homes and businesses. It’s crucial to our economy.
Right now, power companies buy gas on their own.
But this system has flaws.
When gas prices soar, companies cut back on contracts.
That leads to big swings in wholesale electricity prices.
It’s a fragile system in an uncertain market.
And when each company is looking out for number one, the results can let us all down.
Enter Gasco, a new approach to gas procurement.
Role of Ministry of Trade and Industry and Energy Market Authority
The MTI and EMA are shaking things up.
In October 2022, Minister for Trade and Industry Gan Kim Yong unveiled new plans.
Coining a new gas procurement framework, Gan set out to modernise and secure our energy market.
But why? Because the stakes are high.
A whopping 95% of Singapore’s electricity is generated by natural gas.
“Having secured and reliable supplies of natural gas is existential for Singapore,” said Minister Gan.
Introduction of Gasco and Centralised Procurement Approach
Gasco is set to change the game.
Established by the MTI and EMA, its role is clear – centralise and collate gas demand from power generation companies.
If the demand for electricity goes up, Gasco will buy more gas.
Not just for new orders. This system will govern all gas demand, including contract renewals.
But what about those companies with existing gas contracts?
They can keep them. For now.
Benefits of the Centralised Gas Procurement Framework
Centralisation brings strengths many didn’t know we were missing.
Think negotiating power, economies of scale, diverse gas sources.
Add stable prices and a secure supply. It’s a dream come true for Singapore’s energy market.
No more large swings in wholesale electricity prices.
According to EMA, “the centralised gas procurement framework will complement the other guide rails introduced and improve the security and resilience of the power sector’s natural gas supplies.”
Effects on the Greater Gas Industry and Other Stakeholders
But what does centralised gas procurement mean for others in the industry?
Well, for one, licensed importers can still cater to other industrial gas customers.
And it’s no small beans. We’re talking industrial-sized orders here.
But with Gasco promising benefits like never before, many will be asking: What’s next for Singapore’s gas market?
How will centralization impact our relations with external gas markets?
And is this the solution to secure, reliable energy supplies we’ve been waiting for?
As they say, the proof is in the pudding.
Or in this case, the gas.
We’ll be watching.
And so will you.
Given the high stakes and potential massive benefits, can Gasco deliver on its promises? Stay in touch with us at Daily.SG for all the latest updates.