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Friday, December 7, 2012

'TNB can save RM3.5bil a year on IPP payments'



Pakatan Rakyat says it will achieve savings of RM3.47 billion a year on Tenaga Nasional Bhd (TNB) payments to independent power producers (IPPs) if the coalition takes over Putrajaya.

"This will be achieved by reducing the electricity power reserve margin and renegotiating existing contracts between the IPPs and TNB," PKR's Investment and Trade Bureau chairperson Wong Chen said.

NONEThe return on investment (ROI) of the IPPs is now 19 percent - a rate of profit that is too high compared with the global benchmark, which is 10 percent, Wong told a press conference at the PKR headquarters in Petaling Jaya today.

Taking into account the long-term contracts and minimal operational risks the power generation sector faces, Wong believes the ROI can be renegotiated to 10 percent to allow TNB to save up to RM2.6 billion a year.

"Pakatan is committed to renegotiating this deal with the IPPs ," he said.
Reduce power reserve margin as well

The current power reserve margins of 38 percent could also be reduced to 20 percent, which is the optimum level, and this move alone, Wong said, would enable TNB to save up to RM870 million a year.

azlanHe said the savings projected by PKR would boost TNB's annual profit to RM5.6 billion from the current RM2.14 billion.

He also said PKR was committed to ensure that TNB's administration would be free from political interference and that there would be profit-sharing with its employees and administration when its financial and operational targets were met.

"We will also consider the sale of 10 percent of TNB's shares that are held by Khazanah Nasional Bhd to all its 30,000 employees.

"This is part of our economic policy ‘management buyout' to create middle-class owners and reduce government involvement in the private sector," Wong added.

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