Senoko Energy 'seeking govt aid'

Local utility company Senoko Energy is reported to have requested for aid from the Government as it rides out a supply glut that is expected to continue for a few more years.

Nikkei Asian Review reported that the firm has asked to borrow between $100 million and $200 million. It is also lobbying for the Government to create a system that guarantees a revenue stream under long-term contracts, regardless of power plant utilisation.

"With the severe business outlook for the next year or two creating the risk of a shortage of operating capital, the utility is battening down the hatches," an official at Japanese trading house Marubeni reportedly said.

Marubeni and four partners bought the utility firm in 2008.

The Nikkei Asian Review report said it slipped into the red in 2016, and its net loss widened to about $400 million last year.

Singapore is facing overcapacity in its power generation market as the peak supply capacity is now believed to be double its peak demand. Proceeds from electricity sales are not enough to cover costs of fuel, maintenance and financing, it said.

The Energy Market Authority reportedly said that firms made investment decisions based on bullish projections for demand growth that did not materialise.

A spokesman for the agency said the situation of oversupply looks to be changing as demand is increasing with more data centres coming onstream, as well as older and inefficient generating units being decommissioned.