SINGAPORE: Singapore will not introduce road tax rebates or reduce petrol and diesel duties to address rising fuel prices, as such tools are too blunt and would work against the design of existing price signals set before the conflict in the Middle East.
Acting Minister for Transport and Senior Minister of State for Finance Jeffrey Siow said this on Tuesday (Apr 7) as parliament deliberated Singapore’s response to the energy supply shock.
In his ministerial statement, Mr Siow noted that some have questioned if the government will consider reducing fuel or diesel duties.
“We do not think this would be the right move. It is too blunt an approach, and it could also be regressive. At the same time, we want to preserve the price signals for consumers to use energy more efficiently,” Mr Siow said.
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“More fundamentally, as an open economy, we must allow fuel prices to reflect market realities. If prices are artificially suppressed, importers may choose to divert fuel where prices are higher, and over time, this can tighten supply and leave us worse off.”
In clarifications, he said that the road tax also works together with other vehicle policies to achieve other longer-term outcomes.
“For instance, pricing in externalities related to public health and pollution, influencing vehicle buyers to choose more fuel-efficient vehicles.
“These objectives remain relevant, and we don't want to go in the opposite direction. Therefore, a reduction of road tax is too blunt a tool,” he said.
Mr Siow also said that cutting these duties “might not necessarily pass through fully to the end consumer”.
The price of 95-octane petrol in Singapore has climbed by nearly 20 per cent since the start of the war on Iran in late February, while the cost of diesel has soared more than 50 per cent.
The government has unveiled the targeted co-funding of cost increases for certain essential bus services, and cash relief to platform workers, including taxi and private-hire drivers.
Minister of State for Trade and Industry Gan Siow Huang said that regulating or capping petrol or diesel pump prices will distort the market and could benefit those who consume more fuel or are more well-to-do.
“This may not be a fair way of distributing our limited resources. It will also reduce the incentive for Singaporeans, as well as businesses, to switch to more energy-efficient modes of transport,” she said.
Ms Gan said that the Competition and Consumer Commission of Singapore was closely tracking pump prices to make sure there is no anti-competitive behaviour.
"The government does not dictate the prices or price changes of businesses, so long as the prices are set independently. Instead, the government's approach is to ensure that the market remains competitive now for the petrol stations.
"At present, there is no evidence to suggest that the market structure is not competitive," she said.
Over close to three hours, more than 30 Members of Parliament (MPs) sought clarifications on Singapore’s energy supplies, support measures for households and businesses, and security implications.
Earlier, parliament heard that the government does not see a need for Singapore to take drastic measures like export restrictions on fuel or fuel rationing.
As an oil trading and refinery export hub, Singapore can tap diverse sources of energy and fuel supplies, and continues to have access to crude oil.
Around 95 per cent of Singapore's electricity is generated from imported natural gas and about half of the country’s gas is piped from the region.
Mr Saktiandi Supaat (PAP-Bishan-Toa Payoh) asked if there was a risk of Singapore's regional partners implementing export restrictions that could impact its energy supply.
Minister-in-charge of Energy and Science and Technology Tan See Leng said there was no disruption to piped natural gas supply.
Through GasCo, Singapore also continues to source liquefied natural gas from around the world and has diversified its sources, he said.
Dr Tan also reiterated that Singapore's power plants can switch between gas and diesel for electricity generation.
Workers' Party chief Pritam Singh (WP-Aljunied) asked if the government has talked to Indonesia and Malaysia about increasing piped gas supply to Singapore.
He noted that current contracts to import gas from Indonesia expire at the end of 2028.
02:13 Min
Mr Singh also asked if the energy shock is an opportunity for Singapore to bring forward plans to secure more renewable energy sources from neighbours, and in larger quantities.
Dr Tan said that Singapore has to be prepared for worst-case scenarios, and constantly reaches out to its immediate neighbours to talk about the continuous supply of piped gas.
But Singapore also has a strategy of diversifying source countries to strengthen its resilience, he said.
He noted that reserves are dwindling in some of the existing fields that Singapore draws its gas supply from, and that there are discussions about exploring potential new areas to tap on.
"Those conversations happen contemporaneously with our discussions on renewable energy imports," said Dr Tan.
Reiterating that Singapore has enough energy supplies to last for months, Dr Tan also stressed that Singapore's fuel reserves are constrained by space.
"If I had the benefit of space, I would stockpile significantly higher amounts," said the minister.
He said the government had explored stockpiling fuel in floating storage and gasification units, but these were not economically feasible due to the very large costs involved.
Dr Tan also cooled expectations about whether the energy crisis could hasten Singapore’s adoption of nuclear energy through regional collaboration.
Singapore must ensure that advanced nuclear technologies are safe before they can be deployed, he said.
"Regardless of how we collaborate with the rest of the ASEAN member states, we will never put our population at risk of adopting a first-of-a-kind technology.
"We can be a fast adopter, but we cannot be the first-of-a-kind mover," he said.
MPs also asked for clarification on the impact of the energy crisis on Singapore's air and maritime connectivity.
Senior Minister of State for Transport Murali Pillai said there were no significant shortages of aviation fuel.
While the government does not intervene in airlines' commercial decisions to raise ticket prices on the back of soaring fuel costs, it is working closely with the aviation industry to monitor the situation and will assess the need for further measures, he said.
Mr Pillai also said that apart from some flight disruptions, most of the flights at Changi Airport have been operating normally.
The situation remained fluid and uncertain, and it was too early to say if there would be longer-term reconfigurations of flight networks, he said.
Turning to sea connectivity, Mr Pillai said port operations remained stable and that there was no significant shortage of bunker fuel.
But the government expected tanker arrivals may decline in the coming months given the disruption to global energy flows.
On the impact of disrupted helium supplies, Health Minister Ong Ye Kung said that magnetic resonance imaging (MRI) procedures were not affected.
Helium is used in small quantities as a cooling agent in MRI machines, and Singapore's supply of helium is largely not from the Middle East, he said.
In the semiconductor industry, helium is used mainly in wafer fabrication for heat management, cooling and process stability, said Ms Gan.
Wafer fabrication plants in Singapore have not flagged immediate operational impact so far, she said.
These firms obtain helium from multiple sources and have started to activate more alternative sources, and the ministry will work closely with the industry to monitor their needs, she added.
Mr Siow noted that full-time taxi drivers and private-hire car drivers have experienced an average increase of S$150 to S$250 in fuel costs. As such, the S$200 cash relief is in the middle of that range.
The National Trades Union Congress (NTUC) and the Land Transport Authority (LTA) have also been in discussions with platform operators to provide support for these drivers, and have given fuel vouchers, he said.
In response to Mr David Hoe’s (PAP-Jurong East–Bukit Batok) clarification on whether the S$200 would be a one-off support, Mr Siow confirmed that it was, but said that the government will watch how things develop and will step in again if necessary.
“But more importantly, if fuel prices continue to remain elevated at this price for a long period of time, actually, the market ought to accommodate it in the form of higher fares, which will then… consumers will have to adjust their behaviors, including consumption,” he said.
Several MPs also raised concerns about how F&B workers, such as hawkers and canteen stallholders, would be affected by rising prices.
In response to Ms Joan Pereira’s (PAP-Tanjong Pagar) question on whether rental support or utility rebates could be offered, Mr Zaqy said that they are still in a “stable mode” and that the ministry will provide assistance if the need arises.
Senior Minister of State for National Development Sun Xueling added that during the COVID-19 pandemic, the Housing and Development Board (HDB) provided assistance to HDB rental shops through rental waivers.
“We would monitor the situation and if there's a need for us to sync up what we do with regards to rental costs, to help with how hawkers or coffee shop operators are doing, then we will do so,” she said.
Minister of State for Education Jasmin Lau added that the authorities are monitoring costs for canteen stallholders and are mindful that any increases in utilities or ingredient costs would have to be borne by many students and their families.
She added that they would provide financial assistance to the students who need them the most.
Senior Minister of State for Defence Zaqy Mohamad assured that Singapore’s food stockpile is sufficient.
While he could not give additional details due to national security concerns, Mr Zaqy noted that there is no need to activate the stockpiles in the current situation.
The country is also in a better position today, having learnt lessons from COVID-19 and the last energy crisis to be able to diversify food sources, he said.
“While we are not likely to see food disruptions in the short term, we cannot fully insulate ourselves either from increases in food prices as a result of increases such as fertilisers and other food inputs,” he said, adding that he hoped more people would support local farmers.
To conserve more energy, nominated MP Azhar Othman asked whether the government would consider imposing a curb on transportation use, as countries like Malaysia and Indonesia have done.
Dr Tan said while they are contemplating rationing power use, it is “very early days”.
“We don't want to cause panic because we're actually stable. We also don't want to cause panic to investors, to the world economy, to our downstream partner countries, whom we export refined products to,” he said.
However, the government may do an exercise to test out the readiness of the country when it comes to power rationing at some point in time, he said.
In the meantime, the government is incentivising businesses to use the energy-efficient grant and households to use climate vouchers, among other measures.
“So we are trying on multiple prongs to get our population, our businesses, our country, our society as a whole, to adopt energy conservation as its core, as its foundation,” he said.
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Acting Minister for Transport and Senior Minister of State for Finance Jeffrey Siow said this on Tuesday (Apr 7) as parliament deliberated Singapore’s response to the energy supply shock.
In his ministerial statement, Mr Siow noted that some have questioned if the government will consider reducing fuel or diesel duties.
“We do not think this would be the right move. It is too blunt an approach, and it could also be regressive. At the same time, we want to preserve the price signals for consumers to use energy more efficiently,” Mr Siow said.
CNA Games
Show More Show Less
“More fundamentally, as an open economy, we must allow fuel prices to reflect market realities. If prices are artificially suppressed, importers may choose to divert fuel where prices are higher, and over time, this can tighten supply and leave us worse off.”
In clarifications, he said that the road tax also works together with other vehicle policies to achieve other longer-term outcomes.
“For instance, pricing in externalities related to public health and pollution, influencing vehicle buyers to choose more fuel-efficient vehicles.
“These objectives remain relevant, and we don't want to go in the opposite direction. Therefore, a reduction of road tax is too blunt a tool,” he said.
Mr Siow also said that cutting these duties “might not necessarily pass through fully to the end consumer”.
The price of 95-octane petrol in Singapore has climbed by nearly 20 per cent since the start of the war on Iran in late February, while the cost of diesel has soared more than 50 per cent.
The government has unveiled the targeted co-funding of cost increases for certain essential bus services, and cash relief to platform workers, including taxi and private-hire drivers.
Minister of State for Trade and Industry Gan Siow Huang said that regulating or capping petrol or diesel pump prices will distort the market and could benefit those who consume more fuel or are more well-to-do.
“This may not be a fair way of distributing our limited resources. It will also reduce the incentive for Singaporeans, as well as businesses, to switch to more energy-efficient modes of transport,” she said.
Ms Gan said that the Competition and Consumer Commission of Singapore was closely tracking pump prices to make sure there is no anti-competitive behaviour.
"The government does not dictate the prices or price changes of businesses, so long as the prices are set independently. Instead, the government's approach is to ensure that the market remains competitive now for the petrol stations.
"At present, there is no evidence to suggest that the market structure is not competitive," she said.
Over close to three hours, more than 30 Members of Parliament (MPs) sought clarifications on Singapore’s energy supplies, support measures for households and businesses, and security implications.
ENERGY SUPPLY CHAINS
Earlier, parliament heard that the government does not see a need for Singapore to take drastic measures like export restrictions on fuel or fuel rationing.
As an oil trading and refinery export hub, Singapore can tap diverse sources of energy and fuel supplies, and continues to have access to crude oil.
Around 95 per cent of Singapore's electricity is generated from imported natural gas and about half of the country’s gas is piped from the region.
Mr Saktiandi Supaat (PAP-Bishan-Toa Payoh) asked if there was a risk of Singapore's regional partners implementing export restrictions that could impact its energy supply.
Minister-in-charge of Energy and Science and Technology Tan See Leng said there was no disruption to piped natural gas supply.
Through GasCo, Singapore also continues to source liquefied natural gas from around the world and has diversified its sources, he said.
Dr Tan also reiterated that Singapore's power plants can switch between gas and diesel for electricity generation.
Workers' Party chief Pritam Singh (WP-Aljunied) asked if the government has talked to Indonesia and Malaysia about increasing piped gas supply to Singapore.
He noted that current contracts to import gas from Indonesia expire at the end of 2028.
02:13 Min
Mr Singh also asked if the energy shock is an opportunity for Singapore to bring forward plans to secure more renewable energy sources from neighbours, and in larger quantities.
Dr Tan said that Singapore has to be prepared for worst-case scenarios, and constantly reaches out to its immediate neighbours to talk about the continuous supply of piped gas.
But Singapore also has a strategy of diversifying source countries to strengthen its resilience, he said.
He noted that reserves are dwindling in some of the existing fields that Singapore draws its gas supply from, and that there are discussions about exploring potential new areas to tap on.
"Those conversations happen contemporaneously with our discussions on renewable energy imports," said Dr Tan.
Reiterating that Singapore has enough energy supplies to last for months, Dr Tan also stressed that Singapore's fuel reserves are constrained by space.
"If I had the benefit of space, I would stockpile significantly higher amounts," said the minister.
He said the government had explored stockpiling fuel in floating storage and gasification units, but these were not economically feasible due to the very large costs involved.
Dr Tan also cooled expectations about whether the energy crisis could hasten Singapore’s adoption of nuclear energy through regional collaboration.
Singapore must ensure that advanced nuclear technologies are safe before they can be deployed, he said.
"Regardless of how we collaborate with the rest of the ASEAN member states, we will never put our population at risk of adopting a first-of-a-kind technology.
"We can be a fast adopter, but we cannot be the first-of-a-kind mover," he said.
JET AND BUNKER FUEL, AND HELIUM
MPs also asked for clarification on the impact of the energy crisis on Singapore's air and maritime connectivity.
Senior Minister of State for Transport Murali Pillai said there were no significant shortages of aviation fuel.
While the government does not intervene in airlines' commercial decisions to raise ticket prices on the back of soaring fuel costs, it is working closely with the aviation industry to monitor the situation and will assess the need for further measures, he said.
Mr Pillai also said that apart from some flight disruptions, most of the flights at Changi Airport have been operating normally.
The situation remained fluid and uncertain, and it was too early to say if there would be longer-term reconfigurations of flight networks, he said.
Turning to sea connectivity, Mr Pillai said port operations remained stable and that there was no significant shortage of bunker fuel.
But the government expected tanker arrivals may decline in the coming months given the disruption to global energy flows.
Related:
On the impact of disrupted helium supplies, Health Minister Ong Ye Kung said that magnetic resonance imaging (MRI) procedures were not affected.
Helium is used in small quantities as a cooling agent in MRI machines, and Singapore's supply of helium is largely not from the Middle East, he said.
In the semiconductor industry, helium is used mainly in wafer fabrication for heat management, cooling and process stability, said Ms Gan.
Wafer fabrication plants in Singapore have not flagged immediate operational impact so far, she said.
These firms obtain helium from multiple sources and have started to activate more alternative sources, and the ministry will work closely with the industry to monitor their needs, she added.
SUPPORT FOR PLATFORM WORKERS, HAWKERS
Mr Siow noted that full-time taxi drivers and private-hire car drivers have experienced an average increase of S$150 to S$250 in fuel costs. As such, the S$200 cash relief is in the middle of that range.
The National Trades Union Congress (NTUC) and the Land Transport Authority (LTA) have also been in discussions with platform operators to provide support for these drivers, and have given fuel vouchers, he said.
In response to Mr David Hoe’s (PAP-Jurong East–Bukit Batok) clarification on whether the S$200 would be a one-off support, Mr Siow confirmed that it was, but said that the government will watch how things develop and will step in again if necessary.
“But more importantly, if fuel prices continue to remain elevated at this price for a long period of time, actually, the market ought to accommodate it in the form of higher fares, which will then… consumers will have to adjust their behaviors, including consumption,” he said.
Several MPs also raised concerns about how F&B workers, such as hawkers and canteen stallholders, would be affected by rising prices.
In response to Ms Joan Pereira’s (PAP-Tanjong Pagar) question on whether rental support or utility rebates could be offered, Mr Zaqy said that they are still in a “stable mode” and that the ministry will provide assistance if the need arises.
Senior Minister of State for National Development Sun Xueling added that during the COVID-19 pandemic, the Housing and Development Board (HDB) provided assistance to HDB rental shops through rental waivers.
“We would monitor the situation and if there's a need for us to sync up what we do with regards to rental costs, to help with how hawkers or coffee shop operators are doing, then we will do so,” she said.
Minister of State for Education Jasmin Lau added that the authorities are monitoring costs for canteen stallholders and are mindful that any increases in utilities or ingredient costs would have to be borne by many students and their families.
She added that they would provide financial assistance to the students who need them the most.
NATIONAL READINESS
Senior Minister of State for Defence Zaqy Mohamad assured that Singapore’s food stockpile is sufficient.
While he could not give additional details due to national security concerns, Mr Zaqy noted that there is no need to activate the stockpiles in the current situation.
The country is also in a better position today, having learnt lessons from COVID-19 and the last energy crisis to be able to diversify food sources, he said.
“While we are not likely to see food disruptions in the short term, we cannot fully insulate ourselves either from increases in food prices as a result of increases such as fertilisers and other food inputs,” he said, adding that he hoped more people would support local farmers.
To conserve more energy, nominated MP Azhar Othman asked whether the government would consider imposing a curb on transportation use, as countries like Malaysia and Indonesia have done.
Dr Tan said while they are contemplating rationing power use, it is “very early days”.
“We don't want to cause panic because we're actually stable. We also don't want to cause panic to investors, to the world economy, to our downstream partner countries, whom we export refined products to,” he said.
However, the government may do an exercise to test out the readiness of the country when it comes to power rationing at some point in time, he said.
In the meantime, the government is incentivising businesses to use the energy-efficient grant and households to use climate vouchers, among other measures.
“So we are trying on multiple prongs to get our population, our businesses, our country, our society as a whole, to adopt energy conservation as its core, as its foundation,” he said.
Related:
Continue reading...