More transparent bidding process for power producers: Mahathir
Mahathir, launching a two-day electricity conference, said the introduction of IPPs in the country years ago was aimed at instilling competition in the industry.
The IPPs, which now produce some 40 percent of electricity in the country and sell it to state-owned Tenaga Nasional for distribution, had initially caused electricity prices to be more expensive, he said.
"This was merely a short-term temporary cost that was necessary to break down the barriers of entry," the premier said.
"We are ready to introduce a more transparent competitive bidding process as the next immediate step where IPPs can be expected to compete for new power projects. This will generate a more competitive pricing structure."
He did not give details on when the bidding system will be implemented.
Competitive bids
Mahathir said electricity demand in peninsular Malaysia had grown from 3,447 megawatts (MW) in 1990 to 9,948 MW this year, and was projected to grow by more than 117 percent to 21,668 MW in 2010.
"With such huge demand growth expected in the future, it is imperative that we achieve greater energy efficiency," he said.
An Energy Commission was established in May to ensure proper planning and to handle bids for new plants.
"Maintaining an industry structure consisting of IPPs based on competitive bidding in the generation sector should instill a competitive spirit in the industry so that we remove all opportunities for complacency," he said.
The government would continue to promote the use of renewable energy and energy efficiency in its fuel diversification strategy to ensure sustainable future growth, the premier added.
More than 71 percent of Malaysia's power plants run on natural gas.
Mahathir later witnessed the signing of several pacts between Tenaga and several IPPs involving power purchase agreements. One covered a feasibility study for a hydro-plant in central Pahang state.
