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BT (28 Sept 2006) - Venezuela still supplying PowerSeraya with orimulsion

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  • Kaye Poh
    ...after spending $240 million to upgrade these to accept the fuel. To: Feedback Unit cc: Opposition MPs/NCMP cc: sg_review 29 Sept 2006 I refer to the
    Message 1 of 1 , Sep 29 2:30 AM
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      "...after spending $240 million to upgrade these to accept the fuel."
      To: Feedback Unit
      cc: Opposition MPs/NCMP
      cc: sg_review
      29 Sept 2006
      I refer to the subject article in the Business Times of 28 Sept 2006 and other article/letters of 29 Sept and 28 Sept respectively in the Today newspaper attached below about the electricity tariff hike from October 2006..
      If the rumours are proven true, does it mean that $240 million of taxpayers' money have been wastefully spent unless this can be recovered from the Venezuelan supplier if they have breached the contract?
      Does PowerSeraya have other alternative sources for the orimulsion? If not, what were the justifications for the $240m expenditure when they knew they were at the mercy of the sole supplier? Was proper due diligence done to ensure the citizens' money was prudently spent?
      In the Today article of 28 Sept, Singaporeans are expected to pay higher electricity tariff from October 2006. With the possible disruption in the supply of the cheaper orimulsion, does it mean Singaporeans can expect further tariff increases to "compensate" for this $240m expenditure if PowerSeraya is unable to recoup this loss from the Venezuelan supplier, in addition to the higher cost of fuel oil?
      Recently, I read of the possible divestment of the power generation companies ("gencos") by the government (PowerSeraya being one of them), so with this potential $240m loss, how will this impact on how much the government can receive (ultimately the citizens' money as staekholders) when these gencos are sold?



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      Published September 28, 2006

      Venezuela still supplying PowerSeraya with orimulsion
      But it is rumoured production will cease by year-end
      SINGAPORE's second-largest generating company PowerSeraya says it is presently still receiving contracted supplies of orimulsion - a bitumen/water fuel mix from Venezuela - amid reports the South American country will stop producing the fuel by year-end.
      News reports out of Caracas this week said Petroleos de Venezuela (Pdvsa) - South America's largest oil company - is halting orimulsion production to free up the heavy oil for more profitable use.
      Pdvsa has already stopped production at one plant and will do so at its second plant - a joint venture with China National Petroleum Corp - by Dec 31. It did not indicate whether it will compensate customers with contracts.
      'We are aware of the reports, but right now Pdvsa continues to meet contractual obligations,' Neil McGregor, PowerSeraya's managing director told BT.
      There have been talks about Venezuela stopping orimulsion production, but no date was indicated, he said.
      PowerSeraya moved to orimulsion - which is cheaper than fuel oil - to cut costs. It received its first shipment in April 2005 and its 10-year Venezuelan contract still has nine years to run.
      It uses orimulsion - 70 per cent bitumen and 30 per cent water - to fire three 250 MW steam units, after spending $240 million to upgrade these to accept the fuel. The three units account for just less than a quarter of PowerSeraya's total 3,100 MW capacity, most of which is natural gas-fired.
      'The three units can use other fuel including fuel oil and other liquid fuels without any loss of efficiency,' Mr McGregor said.
      A PowerSeraya spokeswoman said: 'PowerSeraya remains committed to a multi-fuel strategy to mitigate against the risk of over-reliance on a single source of energy and to ensure the delivery of reliable and affordable electricity to our customers in Singapore.'
      Reports about Pdvsa moving to phase out orimulsion production first emerged in May last year, with PowerSeraya indicating at that time it was confident that its contracted supplies would continue.
      Singapore News // Thursday, September 28, 2006
      Electricity rates to rise from next month
      Singaporeans will find themselves paying more for electricity from next month. The electricity tariff will be increased by an average of 2.3 per cent for the period from October to December this year. This translates to an increase of just under half a cent per kilowatt-hour. The reason for the increased price is the expected rise in fuel oil prices in the next quarter. The electricity tariff will be reviewed in December and adjusted accordingly in line with the fluctuation in fuel oil prices. — 938LIVE
      Voices // Friday, September 29, 2006
      Feeling powerless
      Are $80-$100 utility bills possible for 4-, 5-rm homes?
      Shrinking household but bills keep growing
      How is expected increase in fuel oil costs derived?
      Letter from Lim Boon Hee
      Letter from Mumtaz A Wahab
      Letter from Lee Hwan Meng

      I refer to the report, "Electricity rates to rise from next month" (Sept 28). It states that fuel oil prices are "expected" to rise in the next quarter and that fuel prices are adjusted every quarter.
      I read with resignation that electricity prices will again go up by 2.3 per cent from Sunday.
      But I find it hard to believe SP Services figures that show that a four-room-flat household pays only about $80 while five-roomers pay about $100 a month for their utilities.
      The utility bills cited seem to be abnormally small. I wonder how these figures were arrived at.
      Could the authority please explain how they derived these figures? Many of us easily pay double the figures quoted.
      We would also like to know how much interest SP Services makes from all the millions held in customers' deposits.
      Also, instead of the current monopoly, will households ever have a choice of electricity providers to enable a choice of using the most competitive one?
      I am an owner of a five-room flat in the east and have lived for the past six years in a six-member household.
      Although we are now a four-member household, consisting of a working couple and two schoolchildren, I notice the size of our utility bill is unchanged, and has even increased despite a decrease in usage.
      Most times, we notice that the bill is almost always calculated based on an estimate, which indicates the meter is not read every month.
      I think it is not fair to judge our estimated bill by the size of our flat and to base the tariffs we have to pay on this estimate.
      I have been paying about $250 to $270 a month since 1999, when we moved in, and our bill has even gone up to the $350 bracket.
      For a small family that is not always at home, this seems ridiculous.
      SP Services responded to my complaints about two years ago and sent an officer to inspect our place.
      Even though we heeded the advice to minimise our electricity usage in many ways, nothing has changed.
      Could the relevant authority look deeper into this matter? I do not think it is only my family that is affected.
      I believe a review is much needed and that bigger subsidies need to be considered for four- and five-room flat owners.
      It should not be assumed that all middle-class families can afford big bills.
      Since July, I have seen petrol stations lowering their prices more than once and international oil prices falling to a six-month low on more than one occasion.
      Perhaps the relevant authority could explain how the "expected" increase for the last quarter of this year was derived.