Malaysiakini reports today the colossal amount of profits made by the Independent Power Providers (IPP) last year. In total, the 13 IPPs made RM3.37 billion of profit before tax (PBT) last year. On average therefore, each of the IPPs makes about RM260 million of PBT last year.
It is public knowledge that some of the IPPs were awarded contracts to produce power and rewarded with power purchasing agreements with TNB since 1994. The contracts run for a period of 21 years, thus expiring in 2015. Just imagine. On the assumption of a RM200 million of PBT every year, each and every IPP would be making RM4200000000.00 of PBT at the end of the concession period! Just count the zeros. That is RM4.2 billion of PBT ladies and gentlemen! And that is on the assumption of just RM200 million of PBT per year.
Just to rub salt in the already very painful wound, as reported in the same Malaysiakini report, it was disclosed in the Parliament that 10 IPPs, within the period of May 1997 to March 2008 enjoyed a total of RM35.7 million worth of gas subsidies from Petronas. (Is this sum correct? Because it sounds suspiciously understated). In trying to justify the colossal amount of discounts given to the already obscene looking IPPs, Deputy Minister in PM’s Department, SK Devamani said that the subsidies did not actually benefit the IPPs but rather, they benefited the end users as electricity rate would be much higher without the discounts.
Sorry. I am feeling stupid today Mr Deputy Minister. If the IPPs are collectively making RM3.37 billion a year, can’t they afford to pay RM35.7 million for the gas in a period of 11 years, which coincidentally would amount to a meagre RM3.245 million a year? And if your contention is correct, why is it that electricity rates are going up instead of coming down?
The statement that the end users, namely, myself and other Malaysians are benefiting from the subsidies and from this obscene privatisation exercise is an insult to all ordinary Malaysians. Reuters reported last year that 40% of the total electricity generation capacity was NOT USED. In fact, as there is no technology as yet available to store electricity, it means that 40% of the total electricity generated in Malaysia is WASTED! And that is not taking into account the power which going to be generated by the Bakun project.
Under the various power purchasing contracts between TNB and the IPPs, TNB has to purchase power from these IPPs at a certain rate. What does that mean? Well, Reuters very succinctly (and very mildly, if I may add) put it as follows:
“Since Malaysia has a glut of power capacity, Tenaga is buying power no one wants.”
The same Reuters report says that as of last year, the IPPs each pay a tax of 1% of the profit. Well, I don’t know whether this is correct but if it is correct, the obvious question would be why are the IPPs paying such low tax? It looks like the IPPs have it all. Firstly, they produce electricity with subsidies given by Petronas. Then they are guaranteed of income by power purchase agreements with TNB at a certain rate. Then, even unused power is also guaranteed of sale by those power purchase agreements. Then they make billions. Then they only pay 1% tax on profit. As reported also, the Government had proposed to increase this tax but the proposal was opposed by the IPPs concerned. Instead, it was also reported, the IPPs concerned had “sought a five-year extension to current pacts, and permanent licences to operate after the agreements expired.” Read that properly. They want permanent licenses to operate! Jeez, the greed of it all! (the IPPs concerned are mentioned at page 2 of the Reuters report).
The privatisation of the power production, as everybody would have known, happened during the (mis)administration of Dr Mahathir. This was his idea of good management of the economy. If all the IPPs could make a total of RM54.2 billion PBT – and it must be remembered that this amount is after deducting costs, including financial costs - (ie RM4.2 billion average PBT per IPP x 13 IPPs) at the end of the concession period of 21 years, why couldn’t TNB itself produce the power? Why must it be privatised? Dr Mahathir did not have to consult a super duper accountant to figure out the numbers. Let’s just say the plant would cost RM30 billion. TNB could incorporate a subsidiary company for the purpose of constructing, commissioning and operating the plant. It can issue bonds with fixed rate certificate for say, 20 years to obtain finance. As TNB is in a monopoly business, namely, the supply and distribution of electricity to all and sundry in the whole Malaysia, I am sure RAM can give an AAA rating to the bonds. Otherwise, the government could even guarantee the bonds. Why so difficult? After all, the business is a monopoly and there are at least 20 million guaranteed end users! I am dead sure TNB would be making money just as the IPPs are now making money (and continuing to make money).
We now talk about sodomy. All of us Malaysians have been sodomised to the hilt!
What do you call this? I call it EcoMahaNomics.
Posts
23 comments:
You are conveniently blaming our beloved ex-PM. Since you do know something about economics, let me tell you;
i) inflation has always been low under Tun M. He messed with the economy with his medicine degree, but, at the end things use to be fine.
ii) The massive increase in electricity prices started during the sleeping PM regime. They pricks are swallowing the billions, with commissions on the side. Tun was very careful with inflation, and he would not have dared to increase petrol and electricity prices this much. He even started the inflasi sifar tagline to control inflation.
iii) THe IPP are allowed to keep the massive profits because they have already made massive investment for the production plant. SO, i think the high returns are justifiable to a certain extent. But, wait, increase in electricity prices, plus, never ending IPP contracts....... u go blame the sleeping prime minister and his SIL...
The IPP agreements where TNB buys electricity at a higher price but are told to sell it at a lower one to the public...is the biggest con job Mahathir and his cronies inflicted on a public that trusted this government blindly....Mahathir whose only economic experience was running a GP clinic caused serious damage to the Malaysian economy by adopting the policy of "let's all make money upfront...the hell with what happens in the future".....for all his Kerala blood......his Malay genes have clearly been working overtime...
Mahathir Kutty is speciality is urology after practising as a GP. He squeezes everybodys balls, thats why no opposition was allowed during his time. now all his supporters are known as anonymous.have some balls la.
There can be no doubt that Mahathire is solely responsible for the total wastage of our inheritance by doctrinaire short-term policies and subsidies which have come home to roost.
This relates to Toll Roads, IPPs, Water, Electricity and Govt buy-back of privatised projects such as MAS, Bank Bumi,UEM, LRT etc. Privatisation has failed miserably in M'sia nd we, the poor public, have been ripped off and truly sodomised
People like anonyomous are these blind party-faithful have no answers an want now to blame AAB & Sil. mahathir was lucky that inflation and oil prices were stable worldwide.
As for the Toll & IPP debacle read my Nune 2008 posting:
'Grand Saga - The Sanctity of Gridlocks & Power Grids" at http://donplaypuks.blogspot.com
Correct, correct, correct
An economic agenda to consider
Thank you everyone for visiting my humble blog.
Donplaypuks, excellent stuffs you wrote at your blog. I have forgotten about TSAA although I do remember reading about what he had said.
To the firs Anonymous in the comments section, thank you. You have been an avid supporter of my blog and for that, I owe you gratitude. At least this time, you did not disagree with me on what DrM had done.
Of course the present government is no better. And I really hope it wouldn't sleep its way through an infinite extension of the power purchase agreements.
I think it is so easy for the present government to deal with the IPPs. If it wants to be bold, just terminate the contract for being against public policy. I volunteer to argue the government's case in Court FOR ABSOLUTELY FREE if it is brought to Courts for terminating the agreements.
The less bold way is of course to wait for the concessions to expire in 2015. Don't even talk of extending the contracts. Let the plants rot. Then TNB or Petronas or Khazanah or whatever move in for the kill. Acquire these IPPs for cheap. By that time their respective NTA is going to be almost nothing.
But then again, I am not in Level 4. So, nobody will listen to me.
Sodomy. It works.
Bro,
I am 100% with you on this. The Govt should cancel & forcibly re-negotiates all these give-away IPP, Toll & Water contracts & sell AP's (like CoE's in S'pore) direct to the public instead of giving it away free to Gaji Buta to croneys and relatives.
More than that, cancel Railway Double Tracking, 2nd Penang Bridge, new MRCB JB CIQ toll road, indiscriminate building of mosques, schools, hospitals, new KLIA terminal and scale down 9MP white elephant projects.
If all these are done carefully, I will give you 100:1 odds that we can bring petrol and diesel prices to $1.50 p/litre. This will reduce inflation to below 3% and keep interest rates at status quo so that the masses are not hit and bled by a double whammy!
http://donplaypuks.blogspot.com
Hi Arty,
Your fetish for manipulation knows no bounds. This time, it seems that you are sucked in a time warp where time stood still and the value of money does not shrink or diminish. Even a nincompoop would know that a dollar back in 1994 is worth much more than a dollar in 2008. But, seeing that you are sucked in a time warp, you probably don’t know a thing about the time value of money. I can still remember back in 1994, a bowl of noodles would cost around RM1.50 at the most but now, it probably cost at least RM4.00 which is an almost threefold increase in price. Well, that’s only for a simple bowl of noodles but for much more complicated services like power generation, I believe the price can easily increase tenth fold. Anyway, you tried to make a big deal out of the RM260 million PBIT that the IPPs were making. It’s not colossal Arty, it’s just normal profits nowadays. In fact, some plantation companies listed on the KLSE are making RM260 million PBIT per quarter!!
You then went out of your way in trying to count zeroes. Yeah, the 13 IPPs will be making RM4200000000.00 from 1994 to 2008. All in all, there are ten zeros including the two after the decimal point, two more than the eight that you have counted. Pretty impressive huh, but Arty, it’s no big deal!! Please don’t make a fuss out of it. Maybank itself makes more than RM2 billion (yeah, there are ten or eight zeroes too depending on how you look at it) per year compared to 15 years for the IPPs, so what’s your point? Arty, every business has to make money right, if not why go into business in the first place. The profit of every business will differ depending on the amount of investment made and the market conditions. It is absolutely meaningless to point at the profits of the IPPs and then start tearing your hair out. If you consider the amount of capital required to start a power generation business and the RM4.2 billion profit spread over 13 IPPs and over 15 years, it is just peanuts. Arty, please go enroll in Business 101 and you will learn something about business.
Next, you start to claim that Deputy Minister Devamani is making you feel stupid. Arty, you are indeed stupid. The gas subsidies given by Petronas are part and parcel of the business contract between Petronas and the IPPs. The amount of subsidies as stated was RM35.7 million or a meager RM3.425 million per year, nothing colossal. I don’t see the link between a meager RM3.45 million and the colossal discounts as claimed by you. Arty, I believe your wild imaginations and hallucinations are beginning to take a hold on you and causing you to imagine that the IPPs look obscene. Only you look obscene and sound obscene!!! Unless we are privy to the business contract between Petronas and the IPPs, we will never know the reasons behind the gas subsidies and that aside, why are you trying to stir controversy over these subsidies. For all we know, Petronas do have a valid reason for these subsidies and Petronas may even indirectly earn money from the IPPs over these subsidies!! You then want to turn the IPPs into charity organizations by making them absorb the gas subsidies. The IPPs can easily afford the RM35.7 million gas subsidies but why would they want to do so? The IPPs do not belong to the government and they are definitely not charity organizations. So, please stop whining over the electricity rates and asking why it is not coming down despite all the subsidies. Arty, will you be realistic, please? Do you seriously expect a meager RM3.435 million per year subsidy to bring down electricity rates? You must be out of your mind!!
You then failed miserably in your attempts to sound like an expert in the power generation business. Arty, it is obvious that you know nuts about the power generation business. It is absolutely ridiculous and absurd to say that 40% of the electricity generated in Malaysia is WASTED! How can that be? Can you please enlighten me? Reuters can write what they want but common sense will dictate that electricity generated must be used or it will not be generated at all. This is because electricity cannot be stored (you were right on this one little bit). So if TNB do not have the demand for electricity, then all it can do is to tell the IPPs to stop production or TNB itself stops production and use up the electricity supply by the IPPs whichever way is cheaper. So, there is simply no wastage of electricity. Tenaga is NOT buying power no one wants.
You followed up with your selective quotations from the Reuters report which seems to give the impression that the IPPs are the most profitable business in the world. Why not, with a low tax rate, subsidized production, guaranteed income, permanent licence and even the Government has to consult the IPPs on the appropriate tax rate to impose on them. At the rate you were going, the IPPs seemed to be above the law and they can dictate and get whatever they want!! Even the Government will have to be at their beck and call and dance like clowns whenever the IPPs fancy. Arty, for heaven’s sake, what kind of crap are you driving at? Do you expect people to believe what you are saying? The Government has no control over the IPPs? Arty, it just doesn’t make sense and worse of all, you are manipulating and turning the Reuters report into absolute nonsense.
It seems that nonsense is not enough for you. You then turn your focus on why TNB didn’t monopolize the power production business. Arty, common sense will tell you that it is never efficient to have a monopoly. The entire business sector will suffer. That’s why the government has to turn to IPPs to balance out the industry and to have some form of transparency. You have also failed to realize that TNB itself do not have the capacity to develop the power generation business at the rate dictated by the economy. If we had leave it to TNB alone, then we will probably be facing sky high electricity bills, constant electric disruptions and you would be running amok on the streets. If you had look at the governments of the world starting from the seventies until today, you would realize that almost all the governments are trying to privatize as much as possible. Margaret Thatcher was one of the pioneers when she privatized British Airways, British Steel, British Leyland, British Telecom, etc, etc. She realized that it is grossly inefficient for a government to be involved in business activities and more importantly, the government has no place doing business at all. All your talk about fixed rate bonds, AAA rating and government guarantees are retrogressive to Malaysia and I will dismiss them as wild imaginations that can only come from a person who is simply insane.
Arty, it is obvious that you are trying very hard to run down Tun Dr M by manipulating facts and as always making wild allegations. You are so consumed with your desire to hit Tun Dr M that you have failed to stop and look at yourself. Arty, you are making a fool out of yourself……….. seriously!!
Anonymous
You are talkingcock.com.
At the time IPP's were given their jambu non-transparent OSA protected contracts, Tenaga had over-capacity of 20%, which would have increased to 40% with Bakun. Today the over-capacity stands close to 30%!!
So, these 'planted' gaji buta alibaba slithering 'entrepreneurs' stole Tenaga's (& OUR)profits becoz Tenaga had to pay even where they did not take up the power supply of IPP's.
What track record did any of these IPP's have? Zero. When Tan Sri Ani Arope was asked who forced Tenaga to allow its profits to be stolen, he said 'Ask the PM (Dr.M)!!'
Why don't you get all these IPP's to declare how much 'donations' they have made to BN coalition parties? The truth will shock you.
Tenaga can produce electricity at 10 cents per kw, yet it was forced to sign IPP contracts at 17-25 cents per kw, which electricity it has never used. And you must be kidding if you think Tenaga could not have raised capital from the KLSE or internationally. Instead, they were forced to borrow money to pay the IPP's their extortionate charges!!
If this is not broad daylight robbery, I don't know what is? You are too blinded by money and materialism to see through the rhetoric and manipulation by our ex-PM.
Wake up or we will continue to be taken for a ride. Try and think why Muhyuddin recently said that AP's will be continued for another 10 years when earlier DPM said it would be phased out by 2009.
Instead of AP's being used to collect revenue by the Govt to build toll-free roads and kep petrol costs reasonably low, it has all gone into the pockets of 4 individuals. Don't you ever wonder why?
The IPP contracts awarded here will not pass the smell test anywhere else in the world. They are not commercial nor have they been awarded in the interest of the Public or People of Malaysia.
That is the absolute truth. Can you seriously live with that? The so-called sleeping PM has nothing to do with it. It was all done at the time and at the behest of Dr.M.
http://donplaypuks.blogspot.com
Hahah...Donplaypuks, meet my biggest fan, Mr/Ms/Mrs Anonymous. And Mr/Ms?Mrs Anonymous, meet Donplaypuks, a like minded citizen of Malaysia. :)
Bro Don, could I have your e mail please. Send me a blank e mail.
cheerz.
Hi Donny,
Your name reminds of Donny Osmond, you know the guy who sang ‘Puppy Love’. It is obvious that you are still having your ‘puppy love’ because you are spewing out a load of puppy shit. Wow! I am impressed with all these crap about Tenaga being 20% over capacity, 40% over capacity with Bakun and currently being 30%. I don’t know where you get these information but whatever it is, those are not information but more like imagination from some puppy love struck kid. Tenaga was never 20% over capacity and the reasons for the IPPs was because Tenaga could not cope and could not increase its capacity at the rate dictated by our economy at that time. As a result, the government has no choice but to appoint the IPPs to provide the required capacity so as to assure the foreign investors that Malaysia has sufficient capacity to meet her future energy demands. Bakun was never intended to supplement Tenaga but rather to act as a catalyst for the development of East Malaysia and to supply electricity to the aluminium smelting plants there. So, Donny your facts are all wrong!! But then, what do you expect from a guy who is still having his puppy love. I am not sure about this 30% over capacity currently, but if it is true, then our sleeping PM and his SIL should take the ‘credit’.
The IPPs did not steal any of Tenaga’s profits but rather, Tenaga surrendered the profits to the IPPs. This iis because Tenaga was never an efficient entity and Tenaga failed to anticipate the exponential increase in energy demand. Well, what do you expect when government agencies try to do business!! Luckily Tun Dr. M saw the problem that was coming and he nipped it in its bud before things got out of hand. If we had left it to Tenaga as what you wanted, we would most likely be living in darkness and using kerosene lamps just like our grandparents. You get the picture, my dear Donny!!
Donny, you seem to have this fixation with track record. Maybe you do have a superb track record with puppy love!! Tenaga has a monopoly over the power generation business in Malaysia. Of course the IPPs would not have any track record because they weren’t allowed to be involved in the first place. So Donny, where do we go from here? Insist on a track record when obviously there isn’t any? Of course not but then that doesn’t mean that the IPPs would be running around like blind mice. We would of course insist that the IPPs engaged international experts to help them run and manage their plants. Donny, please remember there is no track record when we do things for the first time. With proper planning and management, we can do things just as well even when it’s for the first time.
ITan Sri Ani Arope was NEVER asked about who force Tenaga to allow its profits to be stolen. You are telling LIES and putting words into people’s mouth. Shame on you Donny!!! So what if the IPPs have donated millions to the BN coalition parties. I am not shocked one bit. What the IPPs do with their own monies is their own business and I can’t care less. Unless you are implying that the donations have something to do with their IPP status. If you dare, I challenge you to say it out in public. If not, stop talking rubbish and stop behaving like an asshole.
Tenaga was producing electrical power at around ten cents per kWh at its full capacity. It was not able to produce anymore electrical power even if it was offered fifty cents per kWh. This was because Tenaga could not ramp up its production anymore and so, the government has no choice but to turn to the IPPs or risk losing our FDIs. Since the IPPs only produce electrical power, therefore the job of distributing the electrical power has to go back to Tenaga which is why Tenaga signed contracts to buy electrical power from the IPPs. It is only logical to get Tenaga to distribute the power since Tenaga already has its own distribution network. There is no daylight robbery!! Please don’t exaggerate my dear Donny. Tenaga has to sign contracts with the IPPs because it couldn’t cope with its own production. That is the gist of the problem and the sole reason for the setting up of the IPPs.
Donny, it’s time to wake up and please stop playing this blame game!!
Dear Anon
Firstly please follow the eqiquettes of blogging and don't get personal or vulgar.
Please find below extract of interview in STAR with TS Ani Arope where he clearly faults the ex-PM and his EPU for burdening Tenaga with the IPP's. You can also find the article in STAR on-line archives.
Read & weep! And don't accuse someone of lying just becoz you are ignorant. Read more widely and have friend in high places and in industry and you will get lots of facts & info!
Also, I am not fixated on track record, but if none is required, there should have been an open tender so that Tenaga could have got the best deal for themselves and the People.
(http://donplaypuks.blogspot.com)
LINK: http://www.malaysiantalk.com/sarawaktalk2/messages/40143.html
" HOW MAHATHIR BETRAYED WEST MALAYSIANS
Posted by IN BULLYING TNB-IPP POWER PURCHASE AGREEMENTS on June 07, 2008 at 06:18:35:
Former TNB chairman Ani: TNB got a raw deal
Interview with THE STAR in June 2006
( Ani has revealed how Mahathir betrayed West Malaysians to bully TNB in favour of his crony-IPP power producers who sell electricity to TNB with one-sided-biased-against TNB power-purchase agreements . This interview confession or exposure proves that Mahathir has committed high treason , corruption and cronysm )
WHEN the Government decided to approve the request from Tenaga Nasional Bhd (TNB) to raise electricity tariffs, the plight of the national utility took centre-stage. Naturally, the knee-jerk reaction among consumers was not favourable. The 12% rise in tariffs appears to have re-ignited the debate on how good the going is for independent power producers (IPPs) at the cost of the national utility旧 cashflow. The imbalance between the generation side of the business and that of transmission and distribution has put a strain on TNB. To understand the privatisation of the power generation sector, one needs to take a look back in history to understand that the country's IPPs came about as a result of the Government's effort to address the issue of stable power supply after the landmark 1992 blackout. Lending a historical perspective to the issue of IPPs is former TNB executive chairman Tan Sri Ani Arope, who headed the national utility from 1990 to 1996. It was during his tenure that the first generation IPPs were created. StarBiz deputy news editor JAGDEV SINGH SIDHU has the story.
STARBIZ: What happened after the first major blackout in 1992?
Ani: TNB had plans in place to pump out more energy by building plants in Pasir Gudang and Paka. Financing was no problem and our credit standing was very high. We had the land acquired and were ready to move in and plant up.
But we were told by the Economic Planning Unit (EPU) that it had its own plans. We cautioned EPU that if those plants, which would take two years to complete, were not built, Malaysia would get another major blackout. When you have a place with 250 engineers, it does not make sense to say (the blackout) is because of poor planning. But the EPU said it had its own plans and we were told to surrender the land.
Then it surfaced that it wanted to privatise the power plants. I am not anti-IPPs per se. It is good to have other players but it has to be done fairly. It has to be fair to the consumers, not just TNB, which is a conduit. TNB, because of the electricity hike, has been treated as the whipping boy. The focus should be on the consumers.
When the generous terms were given to the IPPs, all my other peers around the world asked what was happening. They said they would like to have a share in the IPPs. They said (the contracts to IPPs) were 鋳oo darn generous.'' (The terms) were grossly one sided.
Tan Sri Ani Arope
How was the Malaysian model of IPPs created?
Ask our previous Prime Minister.
How was the process of negotiations with IPPs conducted?
There was no negotiation. Absolutely none. Instead of talking directly with the IPPs, TNB was sitting down with the EPU. And we were harassed, humiliated and talked down every time we went there. After that, my team was disappointed. The EPU just gave us the terms and asked us to agree. I said no way I would.
What about the pricing and terms of the contracts?
It was all fixed up. (They said) this is the price, this is the capacity charge and this is the number of years. They said you just take it and I refused to sign the contracts. And then, I was put out to pasture.
Why did you disagree with the terms?
It was grossly unfair. At 16 sen per unit (kWh) and with the take or pay situation, actually it was 23 sen per unit. With 23 sen, plus transmission and distribution costs, TNB would have had to charge the consumer no less than 30 sen per unit. If mixed with TNB旧 cost, the cost would come down but that was at our expense because we were producing electricity at 8 sen a unit. We can deliver electricity at 17 sen per unit.
And then there is a capacity charge. Nobody produces excess electricity like Malaysia and it goes to waste because there are no batteries to store that power. TNB only needs a reserve of 15% to 20%.
TNB was producing electricity at 8 sen a unit. What should have been the right price for IPPs to sell to TNB?
Twelve sen. They could not beat our price as we had already amortised our assets. But for the new guys or even ourselves to come in then and (having) to meet interest charges and to make a small profit, it would cost 12 sen a unit.
This was what we told one IPP. The IPP agreed to it but the EPU said that unless the IPP raised its price, the contract would not be given to the IPP. So he got it for 14 sen per unit.
And then, there is the cost pass-through. If the price of fuel went up, the extra cost is passed through to us. And in other words, it is passed on to the consumer.
Under what terms would you have agreed to the IPPs being set up?
Have an independent buyer for the electricity and in one way, let TNB come in and bid for the plants. Get other people to come in. Get a commission to see (to) our needs and TNB can be one of the producers.
It is argued that the IPPs' contracts are too lucrative but there are IPPs in other countries in Africa or Asia that have better terms.
There are IPPs charging 50 to 60 US cents per unit but they use diesel. Take our own situation and compare oranges with oranges. Then it is fair. Do whatever is fair.
How were you affected by the process of awarding the IPP contracts?
I felt sick. It was morally wrong and not fair. If it is legal and not fair, I will not do it. If it is fair and illegal, I still won急 do it. It has to be legal and fair.
We work for the consumers, workers and shareholders. TNB is morally obligated to these three, but the consumers come first, otherwise we won急 be around. It is then the workers and the shareholders.
When I said that, they said 茚ia ingat bapak dia-punya?(He thinks this is his father旧 company). This job is an amanah (trust). You are entrusted with this responsibility and you carry it out to the best of your ability. I do not want somebody to come and urinate on my grave. In the Malay culture, that is about the worst insult they can do to a man.
Do you think you did the right thing by not signing the agreements?
Absolutely.
How should a contract with the IPPs work?
In Australia, they call the IPPs and ask 聴hat is your price''. They will pay the IPP that offers the best price. What they could have done is to throw the net wider and ask everybody (if they) are good, it would be awarded to them. But in our case, the contracts were ready-made and we were asked to sign.
What is your view on the impending renegotiation with the IPPs?
It has to be legal and fair. If we were to negotiate unfairly and illegally, the whole world will be looking at us and they will say 続on急 sign anything with Malaysia because if things go against the country, the Government will void the agreement?
We have to look at this very carefully.
But what we can do now is to say, can we bring down the capacity charge. Anything above the 15% reserve margin, we will call for bids.
The second thing is that the IPPs would have by now paid up their whole capital investments in their plants and it is all gravy (or profit) from now. Could we not bring this down a bit? Instead of paying a small amount to (a special fund), why not increase the (payment) for future planting up? In that manner, we can control the price of electricity. Otherwise, it's going to escalate.
Who in your opinion should get involved in the negotiations?
The consumers should be there. For me, you should get a very independent body. Then, you can bring in TNB, the IPPs, the consumers and Energy Commission. But these bodies and consumers should not make a judgment."
Btw Anon
How about telling us a little bit more about who you are.
I have my own blog re-cativated recently at http://donplaypuks.blogspot.com.
Do u hv your own blog? Let us know the url. Perhaps we can read more of your style of thinking.
Don't worry, we are civilized people and not after your ass. I don't have unnatural tendencies!!! lol
Hi Donny,
Nice try!! I will send my comments to your blog which should be more appropriate.
Anonymous
Why, no balls to admit it when you are proven wrong?
Some of us talk with facts and don't just shoot from the hip!
Just post your comments here, man.
That's what grown up adults & principled debators do!
http://donplaypuks.blogspot.com
Don my man,
Hahahah...I won't dignify Noni's response with a reply or a response. I call his (her?) comment as a response and not a reply. That is because his/her comment does not contain any reply to either my post or yours. Noni's comments only constitute a response and that is what it is. Apart from that, as you have correctly observed, he/she obviously does not know hoe to present his/her case in an orderly and cicilised fashion, preferring instead, to call me or you stupid, asshole and the likes.
The evidence is there for everybody to see. TNB cannot get finance for the plant? Huh? Give the job to me and I could structure the finance in a week or so!
If the power is not used, the IPPs would just not produce the excess? Hahah...funny really. TNB was obliged contractually to purchase the power regardless of usage at a certain fixed rate which is higher than usual. It's not a metter of the IPPs producing more or less electricity. It is about TNB having to purchase power which is not used!!!
IPPs giving money to BN or UMNO and there is nothing wrong with that? If that is not corruption, I don't know what is man. It is obvious that Dr Mahathir has produced people who are so blinkered so much so that they are not able to see what is wrong and what is right anymore.
My talking about fixed rate bonds is retrogressive? Hehe...don't Noni has anything better to say? Bro/Sis, btw, the IPPs finance their project by using fixed rate bonds as well la. What are you talking about? The fixed rate bonds is about the simplest and easiest way of financing a project especially with a guaranteed revenue and profit from the power purchase agreements. In any event, EPF is there. Tabung Haji is there. Petronas is there. These are the sure-money-project which these institution would love to invest in. Instead, the projects were given to a select few from the private sector without a single benefit to the public institutions. Pteronas was instead asked to build Putrajaya at the cost of 30 billion or so!!! And what else must Petronas do with its money and resources? Well, they were also asked to bail out Konsortium Perkapalan by a backdoor purchase of MISC! And who owner Perkapalan may I ask?
What do you call all these? Well I call it EcoMahaNomics.
U r right. Your & my grandmother could have raised funds for these very bankable projects if offered the same terms as croneys or even not so favourable terms.
More than that, if the govt had started an Infratsuructure Development Find & listed it on KLSE, a minimum 2 million citizens would willingly, out of patriotic love for M'sia, have subscribed average $5K each, give a capital base of $10 billion. If we bring in EPF/SOCSO/Khazana/LTAT/ etc we wil have a huge capital base, while many foreign funds will die to get in.
They can still do this, and if coupled with selling AP's directly instead of gaji buta to 4 persons, we can start buying back all the Toll, Highway, Water contracts given away and re-nationalise Tenaga & even Telekom.
With the right startegy we can keep petrol at $1.50 p/litre and still have enough to pay for education, health and other important long-term such as an Integrated Transport System in the major cities, instead of more toll roads and bridges. Petronas need not be the whipping boy for every white elephant project dreamed up by BN to rape our long-term reserves.
Before privatisation we owned all these companies 100%, now it is owned by a few citixens as well as foreigners.
Anyway, I'd still like to hear from that guy who called me a liar and now has no guts to respond when proven wrong!
http://donplaypuks.blogspot.com
Bro
it takes an eternity 4 yr blog home pg to open, probably due to too many pics. Check it out.
pl delete after raeding
To 'that annoying and light on facts Anonymous',
(1) Tun Mahatir ruined our futures and noble institutions (judiciary, police, Attorney General Chambers, and every meaningful and significant agency) to accelerate the wealth coming into our country. All his blue eyed boys became tremendously rich and failed spectacularly with none of them being accountable for anything.
(2) What is the economic justification for requiring Tenaga to have a power reserve of 40%?
(3) I don't mind oppositional comments or criticisms - hell I welcome them. But I would be very appreciative if you cite facts, figures and evidence from credible sources instead of just slagging Art because it is tiring to read you simply content to sucking and swallowing Tun Mahatir's cock on our blog.
Tun Mahatir is being criticized not because he is convenient but because he was terribly inconvenient from the beginning of his reign.
If your Tun Mahatir is so infallible, he sure made the biggest mistake of his career by resigning and handing over the reigns to someone who stabbed him real quick in the back. So much for being a great judge of character. The courts have also cleared Anwar of the sodomy charge. So much for knowing what homosexuality is. And now both the leadership and the rakyat are criticising Tun Mahatir. So much for being a Man of the People as opposed to being one who used them.
The entire sad state of this country is significantly the result of Tun Mahatir's policies. We are still following the arc of trajectory that he has set for us - the current PM and his cohorts are a mere continuation of that.
I only just came upon this blog through Malaysianunplug. It's been a while since the last comment, so it's probable no one will read this.
The subject under discussion is something I'm very familiar with, being a power industry insider (but not TNB or the former NEB).
Tan Sri Ani Arope was quite accurate with what went on then, except for the explanation on excess capacity but then, he's not a technical person. The cost from excess capacity is due the Capacity Charge in the Power Purchase Agreement which have to be paid even if the plant is idle. It has nothing to do with excess generation as power generation and consumption is done in real time.
I can confirm that Dr Boleh's enthusiastic fan do not know what he/she is talking about. TNB/NEB may not have been an outstanding utility but the circumstances leading to the blackout in 1992, subsequent purchase of overpriced aero-derivative, air-lifted gas turbines and entry of IPPs was solely due to the avarice of politicos and cronies eager to get their snots in the trough aided and abetted by Dr Boleh.
If anyone is interested to know more, ask and I'll email you with the answer if I have it. This offer is not extended to blinded Dr Boleh's enthusiasts who think he did no wrong.
Thank you Anonymous for visiting, reading and commenting on this blog. While you are here, do browse around if you have the time.
Your explanation is deeply appreciated. So, it's worse then we all thought. TNB is paying for what is not even produced! Excellent.
Do e mail me with a full expose. Or better still, write an expose. I will publish it here and make sure that it is widely read by linkage to other blogs.
You can mail me. Click on my profile and my mail is there.
Thanks very much for this.
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