Energy, Green Technology and Water Minister Peter Chin called a 90-minute press conference yesterday to clarify and rebut misrepresentations by the opposition related to power production.
"They tried to portray to the people that the government is in collaboration with the independent power producers (IPPs) and benefiting the IPPs. That is the opposite of what we are doing," he said.
The press conference was attended by representatives from all segments of the power production industry including national electricity utility company Tenaga Nasional Berhad (TNB), Petronas, Performance Management and Delivery Unit (Pemandu), Energy Commission and the Association of Independent Power Producers (Penjanabebas).
Chin denied that the country's electricity reserve margin, which currently stands at 45 percent, is a result of poor planning in which the government had granted too many licences to IPPs.
He argued that the government wanted a "bigger cushion" to prevent any sudden rise in electricity demand as the time required to construct a power plant from planning to production is more than three years.
"The government's decision is to make sure whatever may happen, our electricity will always be there. We have ample reserve in order to cushion whatever risk the industry may face.
"The government is quite adamant. We must plan for enough power. We will not allow the blackout in 1992 to repeat again," he stressed.
His view was shared by TNB chief operating officer Azman Mohd, who revealed that the country's reserve margin is predicted to fall below 20 percent in 2015, a "dangerous level".
"This is why we are aggressively trying to plant up," he said.
Azman pointed out that it is not appropriate to compare the reserve margin with other countries because the electricity demand and planning criteria are different.
Currently there are four new power plants on TNB's cards. Two of them are coal plants operated by IPPs, namely Tanjung Bin and Janamanjung, and the other two are hydro plants owned by TNB.
The power purchase agreements (PPAs) for the two coal plants will be signed within six months, said Chin.
Clearing the air on IPPs
Since raising the multi-tiered electricity tariffs by an average of 7.2 percent on June 1, the government has come under fire for its refusal to reveal the contents of the many PPAs signed between the IPPs and TNB.
Critics of the agreements have argued that the PPAs are lopsided, guaranteeing the IPPs hefty profits while the burden is borne by consumers.
They also claimed that the high reserve margin is the result of PPAs requiring TNB to purchase all power generated by the IPPs. One of the requirements stated in the PPAs, the reserve margin is the capability of IPPs to provide extra power when required by TNB.
However, Chin said that this is a misconception as IPPs do not produce more than what TNB needs.
According to a question and answer (Q&A) leaflet distributed at the press conference, the reserve margin accounts for plants being taken off for maintenance, sudden trip-outs of plants and transmission lines, or unexpected consumption pattern.
Chin also reiterated that IPPs and TNB do not enjoy gas subsidiesfrom the government.
"The fuel cost for electricity generation by both TNB and IPPs is a pass-through component, which will then be reflected in the end-tariff to the consumers, subject to government approval."
"From another viewpoint, the government-controlled gas price to the power sector has actually subsidised, not IPPs or TNB, but all segments of electricity consumers," he said.
Chin then took a swipe at the Opposition for accusing the government of giving gas subsidy to the IPPs.
"While I am surprised at such allegations, I am more worried to note that the MPs from opposition parties are unable to grasp simple concepts such as subsidy, and they would choose to misrepresent the details for political mileage," he said.
One of the opposition MPs who repeatedly make the allegation is DAP secretary-general Lim Guan Eng, who claimed that IPPs and TNB enjoy RM19 billion of gas subsidy annually from the government. - Malaysiakini
"They tried to portray to the people that the government is in collaboration with the independent power producers (IPPs) and benefiting the IPPs. That is the opposite of what we are doing," he said.
The press conference was attended by representatives from all segments of the power production industry including national electricity utility company Tenaga Nasional Berhad (TNB), Petronas, Performance Management and Delivery Unit (Pemandu), Energy Commission and the Association of Independent Power Producers (Penjanabebas).
Chin denied that the country's electricity reserve margin, which currently stands at 45 percent, is a result of poor planning in which the government had granted too many licences to IPPs.
He argued that the government wanted a "bigger cushion" to prevent any sudden rise in electricity demand as the time required to construct a power plant from planning to production is more than three years.
"The government's decision is to make sure whatever may happen, our electricity will always be there. We have ample reserve in order to cushion whatever risk the industry may face.
"The government is quite adamant. We must plan for enough power. We will not allow the blackout in 1992 to repeat again," he stressed.
His view was shared by TNB chief operating officer Azman Mohd, who revealed that the country's reserve margin is predicted to fall below 20 percent in 2015, a "dangerous level".
"This is why we are aggressively trying to plant up," he said.
Azman pointed out that it is not appropriate to compare the reserve margin with other countries because the electricity demand and planning criteria are different.
Currently there are four new power plants on TNB's cards. Two of them are coal plants operated by IPPs, namely Tanjung Bin and Janamanjung, and the other two are hydro plants owned by TNB.
The power purchase agreements (PPAs) for the two coal plants will be signed within six months, said Chin.
Clearing the air on IPPs
Since raising the multi-tiered electricity tariffs by an average of 7.2 percent on June 1, the government has come under fire for its refusal to reveal the contents of the many PPAs signed between the IPPs and TNB.
Critics of the agreements have argued that the PPAs are lopsided, guaranteeing the IPPs hefty profits while the burden is borne by consumers.
They also claimed that the high reserve margin is the result of PPAs requiring TNB to purchase all power generated by the IPPs. One of the requirements stated in the PPAs, the reserve margin is the capability of IPPs to provide extra power when required by TNB.
However, Chin said that this is a misconception as IPPs do not produce more than what TNB needs.
According to a question and answer (Q&A) leaflet distributed at the press conference, the reserve margin accounts for plants being taken off for maintenance, sudden trip-outs of plants and transmission lines, or unexpected consumption pattern.
Chin also reiterated that IPPs and TNB do not enjoy gas subsidiesfrom the government.
"The fuel cost for electricity generation by both TNB and IPPs is a pass-through component, which will then be reflected in the end-tariff to the consumers, subject to government approval."
"From another viewpoint, the government-controlled gas price to the power sector has actually subsidised, not IPPs or TNB, but all segments of electricity consumers," he said.
Chin then took a swipe at the Opposition for accusing the government of giving gas subsidy to the IPPs.
"While I am surprised at such allegations, I am more worried to note that the MPs from opposition parties are unable to grasp simple concepts such as subsidy, and they would choose to misrepresent the details for political mileage," he said.
One of the opposition MPs who repeatedly make the allegation is DAP secretary-general Lim Guan Eng, who claimed that IPPs and TNB enjoy RM19 billion of gas subsidy annually from the government. - Malaysiakini
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