Hyflux

[karlmarx]

http://www.businesstimes.com.sg/energy-c...ercapacity

PRESSURE is mounting in the Singapore power generation sector. Mired in massive overcapacity for the past few years, all generation companies (gencos) but one have slipped into the red.

And if the situation persists, there is a possibility a genco could go bust, some warn

1) Most are in the red for only a year or two. Only Tuaspring has been in the red since it started for the past 5 years. With the exception of Tuaspring, the rest of the gencos should be able to survive more than a few years.

2) Hence, if EMA were to adjust price upward, there will be few reasons to doubt that the intent is to save Tuaspring.

3) If the present situation persists, maybe Tuaspring can only be sold for a third of its book. But if EMA intervenes to the benefit of gencos, there is a good chance that it can be sold for close to book. I sense that someone wants to save the Hyflux debt holders.

4) BT's opinion is that demand for electricity is unlikely to grow sufficiently to benefit gencos, hence the need for EMA intervention. But what if demand grows more than expected, a few years down. Then what? Is EMA going to sympathise with the businesses/consumers? Will BT then report that high electricity prices are "unsustainable" for businesses/consumers?