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Why M’sians pay higher electricity rates

Pakatan Rakyat MPs, irked by minister's response,
lay the blame squarely on the government's
direct tenders to IPPs.
KUALA LUMPUR: Closed tenders involving Independent Power Producers (IPPs) ultimately lead to higher electricity prices, said Pakatan Rakyat MPs.

PJ Utara MP (DAP) Tony Pua said that Malaysians paid more for their electricity than the Thais despite local IPPs getting more natural gas subsidies.

“Despite higher subsidies in Malaysia, our electricity prices are higher. They are higher than in Thailand, despite local IPPs enjoying much higher subsidies than in Thailand,” he told reporters in Parliament lobby.

“Natural gas is supplied to Malaysian IPPs at RM13.70 mmBtu while it is 68.6% higher in Thailand at RM23.10 mmBtu. Despite that, a consumer using 500kW of electricity a month in Thailand pays only RM129.50, or 21.4% cheaper than Malaysians at RM157.20.”

The difference, he said, was due to an “extremely” competitive Thai IPP market, where the government awards concessions after prequalification exercises, based “strictly” on price.

Pua was responding to a written response from Energy, Green Technology and Water Minister Peter Chin Fah Kui, over IPP concessions and closed tenders.

The DAP MP asked why the concessions involving the 1000-megawatt (MW) coal-powered plant in Tanjung Bin, Johor, were not given out through an open tender.

Responding to Pua, Chin said that the plant project needed to be completed in a “short time”.

“The project has been awarded through a limited tender at a brownfield site, because it needs to be completed in a short time, and has to be operational from 2016,” he said.

Govt’s tender exercise ‘scandalous’

Chin then confirmed that the tender involved two companies: Jimah Energy Ventures and Tanjung Bin Power.

He also said that the Power Purchasing Agreement (PPA) was still being finalised by the Energy Commission, with an intended finish by the end of the year.

PJ Utara MP (DAP) Tony Pua
This answer irked Pua, who slammed the government for not only awarding tenders to selected IPPs five years beforehand over supposed urgency, but also did so without coming up with the necessary fine print.

“I fail to understand how a project which is only expected to commence operations in 2016, is so urgent that only two companies were called in,” he said, adding that there were more than half-a-dozen “qualified” IPPs that would have taken part in an open tender.

“It is not surprising that Malaysian electricity prices remain relatively high despite the amount of subsidies the government has allocated to the industry.”

Kuala Selangor MP (PAS) Dzulkefly Ahmad called the tender exercise “scandalous”.

“Prime Minister Najib Tun Razak said that he would be committed to open tenders, transparency, best bidding but it is to naught. They’re back to default mode to giving to cronies (through awarding directly),” he said.

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