'Gov't fools for subsidising IPPs but not diesel'
Published: Jun 8, 2011 4:53 PM | Updated: Jun 8, 2011 5:00 PM
The DAP has lambasted the federal government for slashing diesel subsidies which are meagre when compared to the lucrative profits by independent power producers (IPPs), fuelled by natural gas at generous subsidised prices.
The DAP has lambasted the federal government for slashing diesel subsidies which are meagre when compared to the lucrative profits by independent power producers (IPPs), fuelled by natural gas at generous subsidised prices.
In a statement today, DAP secretary-general Lim Guan Eng said that among others, YTL Power in 2010 made RM1.6 billion profit on revenues of RM13 billion, Malakoff in 2009 made RM380 million profit on revenues of RM5.6 billion and Powertek made RM450 million profit on revenue of RM1.34 billion.
Lim said in comparison, savings by reducing the ‘super subsidy’ scheme for C2 class fishing trawlers and eight types of heavy vehicles only saved RM226.8 million, while the reduction in sugar subsidies was supposed to save taxpayers RM116 million.
Thus, he reasoned that it was illogical for BN to be concerned with these numbers when its gas subsidy bill for the power and non-power sectors was a whopping RM26 billion.
“This is a classic case of penny wise, pound foolish,” he said.
He pointed out that the government has admitted that its gas subsidy bill had reached RM131.3 billion between 1997 and 2010, which is in part fuelled by its power purchase agreements (PPA) between IPPs and Tenaga Nasional Bhd (TNB).
“Would the IPPs still enjoy these huge profits without gas subsidies of RM131.3 billion and compulsory PPAs with TNB?” he asked.
Malaysia is under heavy inflationary pressure after the electricity tariff hike and abolishment of the super subsidy scheme came into effect on June 1.
This has led to intensified scrutiny on the IPP agreements with TNB, commonly known as PPAs, that were engineered by the Mahathir Mohamad administration in the 1990s and remain under wraps.
The PPAs stipulate the price at which electricity would be sold to TNB and that it must operate at full capacity at all times except during scheduled maintenance periods.
Opponents argue that the rates stipulated were too high, which appears to be confirmed by former TNB chief Ani Arope in a 2006 interview.
Ani claimed that the Mahathir administration had tried to force TNB to pay 23 sen per kWh to IPPs at a time when TNB was generating electricity at eight sen per kWh.
In a statement today, DAP secretary-general Lim Guan Eng said that among others, YTL Power in 2010 made RM1.6 billion profit on revenues of RM13 billion, Malakoff in 2009 made RM380 million profit on revenues of RM5.6 billion and Powertek made RM450 million profit on revenue of RM1.34 billion.
Lim said in comparison, savings by reducing the ‘super subsidy’ scheme for C2 class fishing trawlers and eight types of heavy vehicles only saved RM226.8 million, while the reduction in sugar subsidies was supposed to save taxpayers RM116 million. Thus, he reasoned that it was illogical for BN to be concerned with these numbers when its gas subsidy bill for the power and non-power sectors was a whopping RM26 billion.
“This is a classic case of penny wise, pound foolish,” he said.
He pointed out that the government has admitted that its gas subsidy bill had reached RM131.3 billion between 1997 and 2010, which is in part fuelled by its power purchase agreements (PPA) between IPPs and Tenaga Nasional Bhd (TNB).
“Would the IPPs still enjoy these huge profits without gas subsidies of RM131.3 billion and compulsory PPAs with TNB?” he asked. Malaysia is under heavy inflationary pressure after the electricity tariff hike and abolishment of the super subsidy scheme came into effect on June 1.
This has led to intensified scrutiny on the IPP agreements with TNB, commonly known as PPAs, that were engineered by the Mahathir Mohamad administration in the 1990s and remain under wraps.
The PPAs stipulate the price at which electricity would be sold to TNB and that it must operate at full capacity at all times except during scheduled maintenance periods.
Opponents argue that the rates stipulated were too high, which appears to be confirmed by former TNB chief Ani Arope in a 2006 interview.
Ani claimed that the Mahathir administration had tried to force TNB to pay 23 sen per kWh to IPPs at a time when TNB was generating electricity at eight sen per kWh.
View Comments0