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Sunday, June 12, 2011

Guan Eng joins call for RCI into TNB's contracts with power barons

Guan Eng joins call for RCI into TNB's contracts with power barons

DAP secretary-general Lim Guan Eng has joined the growing calls for a Royal Commission of Inquiry to probe and review Tenaga Nasional Berhad’s contracts with the independent power producers (IPPs).

Guan Eng said the RCI should determine exactly how severely lopsided the deals were and how they contributed to the burdening of consumers with higher electricity tariffs . He also wants the RCI to introduce measures to either reduce or remove "this huge financial burden on the people".

"Would BN dare to tell the fishermen who refuse to go out to sea to protest against the diesel subsidy cuts why they are forced to pay RM1.80 instead of the super subsidy price of RM1.25 per liter, and why fishermen has to suffer but not IPPs?" Guan Eng, who is also Penang chief minister said in a statement.

"Consumers will now have to pay for more expensive fish and other basic commodities. Transport charges have gone up by up to 30% and yet the government says that inflation will only go up by 0.27%! Every ordinary housewife who shop in the markets will tell you that the BN government is ridiculous."

Petronas has up to end 2010 extended about RM131.3 billion in gas subsidy to both the power and non-power sectors. In 2009, TNB had received RM 5.4 billion in gas subsidy, the IPPs RM7.3 billion and the non-power sector RM6.8 billion.

The greatest beneficiaries of the giant gas subsidy are the IPPs who also benefit from a guaranteed buyer through the compulsory Power Purchase Agreement signed by TNB.

"Normally, TNB would not be raising electricity tariffs with such huge subsidies. But the RM5.4 billion subsidies enjoyed by TNB were offset by being forced to purchase power they do not need, causing a reserve margin that is the highest in the world of 52.6% in 2010," said Guan Eng.

"The Economic Planning Unit or EPU’s role in this sorry episode resulted in Tan Sri Ani Arope resigning in protest as CEO of Tenaga, who also aptly referred the EPU as the 'Economic Plundering Unit'. Clearly IPPs benefited the most and yet did not suffer a single cent in subsidy cuts allowing them to reap huge profits."

Taking it out on the small consumers

Guan Eng also said there was "no logic or reason" why the BN government should be so concerned about annual savings of RM226.8 million from reduction of diesel subsidies or RM116 million from reduction of sugar subsidies or electricity tariffs that will save a total of less than RM1 billion, yet be "not concerned by the huge gas subsidies given to the IPPs".

Amongst the IPPs, YTL Power’s profit for 2010 was more than RM1.6 billion on revenues of RM13 billion. Malakoff in 2009 had a profit of RM380 million on revenues of RM5.6 billion. Powertek had revenues of RM1.34 billion and a profit of RM450 million.

"Would the IPPs still enjoy these huge profits without gas subsidies and compulsory power purchase agreements with Tenaga Nasional Bhd?" asked Guan Eng.

"That is why the Royal Commission should make public all contracts and power purchase agreements which the BN government has refused to disclose. The Royal Commission should also determine the impact on inflation and whether it is 0.27% as claimed by the BN government. Perhaps BN Ministers should ask their wives to start shopping in the markets to see whether prices have gone up by only 0.27%."

UMNO veteran leader and Gua Musang MP Tengku Razaleigh has also called for an RCI to probe TNB's contracts with the IPPs, agreeing that the lopsided deals had burdened consumers.

“The commission must investigate and propose the best suitable measures to be taken by the government to ease the burden to be borne by the consumers following the inevitable increase in the electricity tariff after the IPPs charged higher rates to TNB,” Bernama quoted the Gua Musang MP as saying.

On June 1, the Cabinet raised power tariffs by an average of 7.12 per cent effective in a bid to trim a growing subsidy bill and widening fiscal deficit. But the unpopular move enraged the public and has also thrown the spotlight on the IPP contracts, which the Najib administration appears determined to keep top secret.

- Malaysia Chronicle

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