1                 The Ministry of Trade and Industry (MTI) has received the report of the Energy System Review Committee (ESRC).

2                 MTI thanks the ESRC for the time and the commitment they have dedicated to this important task. The members have deliberated carefully and have made many important recommendations on how to further strengthen Singapore�s energy security. MTI will carefully study the recommendations for implementation.

3                 MTI agrees with the ESRC that it is important to impose high standards of performance and reliability on the gas receiving facilities in view of their critical role in our highly interdependent gas and electricity systems. Over the past year, the Energy Market Authority (EMA) has been working closely with ConocoPhillips to ensure that the latter takes active steps to address the physical and operational deficiencies of its ORF. It has also started work to regulate ORF operators and will announce the details of the licensing framework shortly.

4                 In addition, EMA will ensure that the generation companies hone their ability to hotswitch so that they eliminate potential failure factors as much as possible. To enhance gas supply security, two of the three major power stations are already supported by two sources of gas. The third plans to have its second pipeline by the middle of this year. This development of a dual feed system will help mitigate a single gas pipeline failure. EMA will review what additional infrastructure investment is needed to enhance system robustness.

5                 MTI will also continue to take steps to liberalise the gas market for open access and greater competition. It will put in place legislation to support new entrants. It will also ask EMA to undertake (a) a cost-benefit analysis of the interconnection options suggested by the ESRC; and (b) an independent critique of the draft Network Code to ensure open access to our gas system. These two studies should be completed in a few months. This will pave the way for liberalisation of the gas market by the end of 2005.

6                 Since the liberalisation of the electricity and gas markets in 2000, many developments have taken place to ensure that the policy and regulatory frameworks, market structures, and capabilities and expertise keep pace with market reforms. This is an ongoing process, and the work of the ESRC will contribute significantly to our efforts to make our energy systems more secure and robust.

MINISTRY OF TRADE AND INDUSTRY

17 MARCH 2005