Tenaga Nasional must justify not only to the Cabinet but also to the Malaysian consumers its proposal for revision of tariff rates

Media Statement
by Lim Kit Siang

(Petaling Jaya, Saturday): The Minister for Energy, Telecommunications and Posts, Datuk Leo Moggie, yesterday confirmed that his Ministry had received a proposal for a new power tariff structure from Tenaga Nasional Bhd but had yet to decide on it.

Tenaga Nasional Bhd executive chairman Datuk Dr. Ahmad Tajuddin Ali had earlier said that the proposal, which was submitted two weeks ago, would keep tariff rates at a very competitive level while at the same time allow Tenaga to remain financially viable so that it could make the necessary investments for long-term supply of electricity.

Tenaga Nasional should make public its proposal for revision of tariff rates as it must not only convince the Ministry of Energy, Telecommunications and Posts and the Cabinet, but also the Malaysian public that it has a strong case to again increase power tariffs in the country - when the last tariff revision was only in March last year.

In Parliament last December, I had urged the government to reject any request by Tenaga Nasional for a new round of electricity tariff increases especially as Tenaga Nasional is unable to improve on the quality of its service in reducing the high incidence of power interruptions.

Only yesterday, Subang residents in Bandar Subang Jaya, Bandar Sunway and USJ in Selangor experienced power supply disruption for up to eight hours, while in Kuala Lumpur, residents of Jalan Medan Tuanku Satu and part of Sultan Ismail suffered a three-day power breakdown.

Is Tenaga Nasional prepared to pay compensation or an ex gratia sum to the consumers in Subang, Selangor and Kuala Lumpur who had suffered losses from such frequent power disruptions?

The government should seriously consider requiring Tenaga Nasional to accept liability and to pay compensation to consumers for power interruptions before considering any new proposal for revision of power tariffs.

In any event, it is most unfair for Tenaga Nasional to demand tariff revision to make consumers pay for the high costs of electricity charged by Independent Power Producers (IPPs).

The power purchase agreements which Tenaga Nasional had concluded with IPPs impose very exorbitant rates which had to be paid by Tenaga Nasional, and are as follows:

IPPs Power sold to Tenaga
(Sen per unit)

Genting SanyenPower Sdn. Bhd. 11.8
Port Dickson Power Sdn Bhd 13.0
Powertek Bhd 13.1
Segari Energy Venture Sdn.Bhd 13.5
YTL Power Generation Sdn. Bhd. 15.5
Bakun Hydroelectric Corp Bhd 16.5

The price fixed for the Tenaga Nasional to buy electricity from the IPPs are exorbitant and against the public interest, as the cost of generating power by Tenaga itself is well below 10 sen per unit.

It is open secret that there are companies which are prepared to generate and sell electricity to Tenaga Nasional at less than 10 sen per unit, which the government would have been able to take full advantage of if it had called for public tenders and invited bids for intending IPPs and signed Power Purchase Agreements with those offering the lowest sale price per unit of electricity, instead of entering into secret IPP deals with selected companies.

If the average cost of IPPs’ rates are reduced by one sen per unit, based on the RM2.26 billion which Tenaga had to pay IPPs last year, this would mean a saving of RM135 million!

This is why before the government considers the new proposal by Tenaga Nasional for another increase of power tariffs, Tenaga Nasional must re-negotiate with the IPPs to standardise their electricity rates and reduce the burden on the consumers.

Tenaga Nasional and the IPPs must be seen to be fair to the consumers before the Malaysian public are asked to bear another new financial burden through a new round of increase of electricity tariffs.


*Lim Kit Siang - Malaysian Parliamentary Opposition Leader, Democratic Action Party Secretary-General & Member of Parliament for Tanjong