The Fallacy Of Strong SGD and Privatisation of Essential Services

Written by Askmelah 1 Apr 2011
A sharp observation indeed by Mr Roland. There has been a constant complaint from man-in-the-street on the ever escalating cost of living in Singapore. What the petrol companies do not say is that a large part of their costs comes from high wages, rentals, taxes and profits. Thus when the prices of petrol goes down or cost saving due to strong sin dollars, the saving rarely pass to the consumers as both the petrol companies and public utitlity company (owned largely by Singapore Government) will blame it on the non-oil cost. However, when the oil prices rise, these private and public companies are quick to pass the costs to the consumers in no time.
The cost of UNSUBSIDISED Grade 97 just across the causeway in Malaysia is RM$2.50 (which is SGD1.05), almost half the cost of the cheaper Grade 95 petrol sold here. Can the Government do something? Of course they can, here are some suggestions:
  • Set up a cooperative such as NTUC to sell petrol to prevent profiteering
  • Control the land price for essential services such as petrol pumps instead of leave it to market forces
  • Essential public services such as public utilities hould not be privatised and should be cost recovery instead of profit driven. To push this envelop further other public services such as busese, MRTs, post services, hospitals, hawker centres should not be privatised in the first place (I am glad Mr Sanjay Perera articulated similar view in the 4 Jan 2012 commentary). Many people in Singapore have not agreed these essential services to be privatised. The efficiency in productivity brought about from the privatisation should result in cheaper services, an argument often used by the elitist Government, sadly has not benefited the consumers. Instead we are seeing cost escalation as the private companies now are pure profit driven and the poor citizens suffer.
The Government is using the strong Sing Dollar as a monetary policy to curb inflation, the problems are 1) it hurts our exports which means possible job losses in a few years time as the effect often takes time to show up and 2) what happen when the US$ strengthen in a few years time? Everything will go up by 20% at least if the exchange rate go from 1.26 to the historical average of 1.5 (the all time high exchange rate was close to 1.8)?

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‘Where is the increase in cost to petrol companies?’

Source: The Straits Times, 12 Mar 2011

MR ROLAND CHIA: ‘In July 2008, oil was US$147 per barrel at an exchange rate of S$1.36 to US$1. The recent spike saw the price of crude per barrel reach US$105 at an exchange rate of S$1.27. The cost in Singapore dollars was $199.92 in July 2008 against $133.35 per barrel today. This is a drop of some 33 per cent in Singapore dollar terms. Where is the increase in cost to the petrol companies?’

Electricity tariffs up 6.5% from April
Source: Todayonline Mar 30, 2011

HDB households will be buffered by U-Save rebates announced under the ‘Grow and Share’ package

The surge in oil prices in recent months will push electricity prices here to their highest in two-and-a-half years: From Friday, power tariffs between April and June will increase by 6.5 per cent from the first quarter to hit 25.58 cents per kilowatt hour, SP Services said yesterday.

The increase will cost the average household in a four-room flat an extra S$4.85 monthly.

However, HDB households will be buffered from the hike – thanks to rebates under the “Grow and Share” package which were announced during the Budget in February.

For example, those living in one- and two-room HDB flats will get total Utilities-Save (U-Save) rebates that offset at least five months of their utilities bill on average, based on the new tariffs. Those living in bigger HDB flats will benefit from at least one month of offset of their utilities bills on average.

In October 2008, the tariffs hit a record-high of 30.45 cents per kWh. SP Services said the latest hike is due to the average fuel oil price rising by 14 per cent from S$99.45 to $113.37 per barrel over the last three months.

The increase was partially offset by SP Services’ lower cost of transporting electricity through the power grid as a result of an annual review – from 4.92 cents per kWh, to 4.78 cents per kWh. This will apply for at least a year.

Accountant G T Kee, 57, described the 6.5-per-cent increase in electricity prices as “no joke”. Mdm Kee said her household of five spends S$300 to S$400 each month on electricity. This means the new power prices will cost her family about S$20 more monthly. She added that her family might become more conscious about switching off lights that are not in use.

The heftier electricity bills would add to households’ concerns on the rising cost of living, which is expected to be a hot-button issue in the coming General Election.

Yesterday, the Ministry of Finance said that next month, U-Save rebates ranging from S$170 to S$220 will be given to Singaporean HDB households. One- to four-room flat dwellers will get a month’s rebate on their Service and Conservancy (S&C) charges, while those in larger flats will get half a month’s worth.

In all, about 800,000 Singaporean HDB households can expect to receive about S$163 million worth of U-Save rebates and S$31 million worth of S&C charges next month.

Another tranche of U-Save rebates will be distributed to households in July, and S&C charges rebates will be given in June, September and December for most households. The total U-Save rebates for this year will range from S$235 to S$360. Households will also enjoy one- to three-months’ rebates on S&C charges this year. CIMB regional economist Song Seng Wun told TODAY that oil prices are likely to stay high for the rest of the year unless uncertainty in the Middle East and North Africa ebbs.

Mr Song noted the possibility of public transport operators asking for an upward revision of fares at the annual fare review – set to take place by October. “If (oil) prices stay high, the operator may cite higher cost, and we may have to brace ourselves for this,” he said.

Jurong GRC Member of Parliament Halimah Yacob said she would monitor how residents are affected by the higher power tariffs.

“In any case, residents who face problems with their utilities or S&C charges because of financial problems or family members falling sick should look for their MPs. We have schemes to help, so do the Community Development Councils,” she said.


Oil prices down, but pump prices still high

Source: The Straits Times  19 May 2012

OIL prices have dropped by an average of 10 per cent since April, but the prices of petrol and diesel, as well as liquefied petroleum gas (LPG) cylinders for home use, have not seen a similar decrease.

Meanwhile, major oil companies are posting multibillion-dollar profits for their first quarter this year.

I wonder why the Consumers Association of Singapore has been silent about the development.

Interestingly, in July 2008 when the Brent crude price was US$147 per barrel, our pump price for Mogas 95 unleaded was $2.236 per litre before discount.

On May 8 this year, the Brent crude price was down to US$111.24 per barrel, while our pump price for Mogas 95 unleaded was $2.17 per litre before discount.

What’s more, over the past four years, the Singapore dollar has strengthened against the US dollar, from 1.55 to 1.25.

So I am baffled as to why consumers here are paying so much more for their LPG, petrol and diesel.

David Goh


Petrol pricing an ‘unfair’ enigma

From Ronald Koh

The pricing of petrol is an enigma. The prices go up with the rising price of oil, but do not come down when the cost of petroleum falls.

On the other hand, petrol stations give discounts to car owners who possess bank credit cards and this discount can be as much as 17 per cent in total.

This pricing of petrol is unfair and this discounting to holders of credit cards is discriminatory.

Why do the petrol stations not adjust the price of petrol accordingly to the cost of petroleum?

People who do not posses gold or platinum credit cards are usually not rich and with petrol discounts for certain cardholders, these drivers are put to a disadvantage. Let’s make things easier and be fair to all.