Ani Arope blames high power tariffs on ‘Economic Plundering Unit’

By Debra Chong

June 03, 2011

KUALA LUMPUR, June 3 — Former Tenaga Nasional Berhad (TNB) chief executive Tan Sri Ani Arope is blaming the Economic Planning Unit (EPU) for rising electricity tariffs, saying the powerful agency forced the national power company to sign lopsided purchase deals nearly 20 years ago.

Ani said EPU, which he sarcastically dubbed "Economic Plundering Unit", forced Tenaga to buy electricity from an independent power producer (IPP), believed to be Genting Sanyen, at 14 sen per kilowatt hour (kWh) despite an existing offer of 12 sen/kWh then. Other IPPs then were charging 16 sen/kWh Genting Sanyen became the first IPP to transfer 15 million watts (MW) in electricity to TNB’s national grid on April 15 and is scheduled to complete a RM1.8 billion upgrade on its existing gas-fired plant with a capacity for 720 MW by June next year.

“You don’t need to go to a fanciful business school to figure out why we need a tariff hike — just revisit the terms given to some IPPs,” Ani, who helmed the utility company between 1990 and 1996, said in his last Facebook posting three days ago.

“With the take-or-pay clause and with the 40 per cent excess reserve that we have today, one only has to produce half of one’s capacity and be paid 80 per cent of the agreed capacity. Well done the then-EPU — Economic Plundering Unit,” he added, mocking the economic unit under the Prime Minister’s Department.

Ani called for a review of the original terms with the IPPs as the storm over energy price deals continues to build up.

DAP publicity chief Tony Pua cited today Ani’s 2006 interview with English daily, The Star, to increase pressure on the federal government to declassify the power purchase agreements (PPAs) inked between TNB and the IPPs.

Ani caused a stir 15 years ago when he chose to resign from his executive chairman post rather than sign the imbalanced deals, which saw the first generation of IPPs created, such as YTL Power Services, Powertek and Malakoff during the Mahathir administration.

“TNB is the whipping boy. TNB has no control of the price it has to pay to the IPPs. Get to the source of the problem,” said the Penang-born now in his early 80s.

The Najib administration has been savaged for allegedly protecting the interests of IPPs rather than the public.

Putrajaya announced the 7.12 per cent hike in electricity rates in an effort to trim a subsidy bill that would otherwise double to RM21 billion this year and promised the hike will not affect 75 per cent of domestic consumers.

But power prices will now rise by as much as 2.3 sen per kWh in areas taking TNB’s electricity supply, a potential source of public anger just ahead of a general election expected within the year.

The Star daily reported today the government was close to inking a deal for a 1000 MW coal-fired plant in Manjung which will charge 25 sen/kWh.