IPPs 'overcharging' for power generation
Published: Jun 13, 2011 6:45 AM
| Updated: Jun 24, 2011 8:20 AM
The perception is that the IPPs’ cost structure is particularly bloated and there are substantial inefficiencies, says an independent think-tank.
If there is no subsidy for natural gas, independent power producers (IPPs) will charge 80 percent more than the current rate, according to think-tank Research for Social Advancement (Refsa).
In a statement today, it said the calculation is an extrapolation of the 25 sen per kilowatt-hour (kWh) being charged, when the gas price was pegged at RM10.70 per mmBtu for IPPs.
“If the gas price is raised to the market level of RM47.42 per mmBtu, we estimate the IPPs will charge about 74 sen per kWh,” said the group.
When contrasted with Singapore where gas is sold at market prices, the generation cost is just 41 sen per kWh and is sold to consumers at 52 sen per kWh.
Refsa surmised that at the current subsidised rates, the IPPs are producing power inefficiently and are overcharging for it.
“It might be perceived that the IPPs’ cost structure is particularly bloated and there are substantial inefficiencies,” reads the statement.
Refsa also called on the Association of Independent Power Producers to elaborate on its power generation costs.
‘Bypass secrecy clause’
Refsa also dismissed suggestions that the power purchase agreements (PPA) between IPPs and Tenaga Nasional Bhd (TNB) cannot be publicly disclosed because of the non-disclosure clause.
The group said that, although TNB is a public-listed company, it is controlled by the government through Finance Ministry-owned Khazanah Nasional Bhd and the Employees Provident Fund, which together control 83 percent of the company.
“The government maintains a golden share, giving it control over key decisions at TNB,” reads the statement.
Refsa said it is in the public interest to make the PPA public to ensure transparency.
It noted that there have been positive outcomes from the disclosure of highway concession contracts, as toll charges have been scrapped for some highways while scheduled rate increases have been suspended.
IPPs, where's your social responsibility?
In a statement today, it said the calculation is an extrapolation of the 25 sen per kilowatt-hour (kWh) being charged, when the gas price was pegged at RM10.70 per mmBtu for IPPs.
“If the gas price is raised to the market level of RM47.42 per mmBtu, we estimate the IPPs will charge about 74 sen per kWh,” said the group. When contrasted with Singapore where gas is sold at market prices, the generation cost is just 41 sen per kWh and is sold to consumers at 52 sen per kWh.
Refsa surmised that at the current subsidised rates, the IPPs are producing power inefficiently and are overcharging for it.
“It might be perceived that the IPPs’ cost structure is particularly bloated and there are substantial inefficiencies,” reads the statement.
Refsa also called on the Association of Independent Power Producers to elaborate on its power generation costs.
‘Bypass secrecy clause’
Refsa also dismissed suggestions that the power purchase agreements (PPA) between IPPs and Tenaga Nasional Bhd (TNB) cannot be publicly disclosed because of the non-disclosure clause.
The group said that, although TNB is a public-listed company, it is controlled by the government through Finance Ministry-owned Khazanah Nasional Bhd and the Employees Provident Fund, which together control 83 percent of the company. “The government maintains a golden share, giving it control over key decisions at TNB,” reads the statement.
Refsa said it is in the public interest to make the PPA public to ensure transparency.
It noted that there have been positive outcomes from the disclosure of highway concession contracts, as toll charges have been scrapped for some highways while scheduled rate increases have been suspended.
IPPs, where's your social responsibility?
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