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REGULATION | Cesar Tordesillas, Indonesia

Govt review sought for TNB deal with IPPs

Malaysia's Democratic Action Party urged the Malaysian government to review the agreement that Tenaga Nasional Berhad has with independent power producers.


DAP’s Charles Santiago said the deal was lopsided in favour of the IPPs as it compels TNB to purchase all electricity produced by the former even if it is beyond its needs, thereby causing suffering to consumers.

Under the agreement, the IPPs are guaranteed 20% to 22% in returns on investments, Santiago added.

“For every RM1,000 they invest, they are assured of profits between RM200-RM220,” Santiago pointed out. He went on to accuse the government of victimising the public in order to maintain subsidies for its rich cronies.

“TNB always ends paying too much to the IPPs, prompting it to hike up rates from time to time,” he said. “The consumers are footing the bill for the excess power it purchases and the IPPs take home millions in profit.”

On the gas rate increase, Santiago said the cost of production of per mmBTU was between RM15 and RM16 but that for the pasttwo years, the IPPs had been paying only RM10.70 per mmBTU to Petronas.

“As of June 1, the IPPs must pay RM13.70 per mmBTU, but that also means Petronas is still subsidising about RM2 per mmBTU for IPPs,” he said.


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