Electricity charges expected to be reduced

KUALA LUMPUR: Tenaga Nasional Bhd (TNB) expects a reduction in power tariffs soon following fresh moves to renegotiate its power purchase agreements (PPAs) with independent power producers (IPPs).

Its chairman Tan Sri Leo Moggie said an announcement would probably be made this month as the Government was currently looking into the matter.

“It can be substantial, depending on how much IPPs are prepared to give,” Moggie said when asked about the expected reduction. He said the re-negotiation with the IPPs would definitely translate into a reduction in tariffs.

“Definitely, whatever benefits and savings we can get from IPPs would lower the tariff,” Moggie said, adding that TNB had had a few meetings with the IPPs.

“Under the present situation, we think it is time for the Government to allow us to review the agreement with IPPs,” he told reporters after a Chinese New Year lunch with the media yesterday.

“We would let the Government decide on what to do,” he said. “We hope the agreement with IPPs would be revisited because there are certain areas that we can improve for the benefit of the public.”

Former prime minister Tun Mahathir Mohamad had on Wednesday said it was time to re-look at TNB’s agreements with the IPPs.

Commenting on the latest development, Dr Philip Tan, the president of Penjanabebas, the IPPs’ association, said “the industry feels that it is unfair for us to be blamed when tariffs are increased, as in July last year, due to escalating fuel prices.”

He said fuel price was “a cost component that the IPPs derive no financial benefit from” and that “under the terms of all PPAs, fuel supplies are provided directly to our members at costs determined by the authorities for gas, or for coal, at a market price negotiated directly by TNB.”

On the delay of TNB’s central area reinforcement (CAR) project in Rawang, Moggie said: “The project has been put on hold and we need the Government to inform us of the status of the project.”

“If the Government wants to proceed with the project, let’s find the solution quickly,” he said.

The RM400mil project, which was left with only one km of installation work, was put on hold when some 20 affected families in the area did not want to be relocated.

The CAR power transfer project involves installing new high capacity power lines from the north of Peninsular Malaysia to central Klang Valley.

Moggie said TNB was already overburdening current power routes and could not guarantee uninterrupted supply.

“The possibility that it can happen is always there. We cannot resolve the problem of electricity breakdown if we do not complete the CAR project,” he said.

When asked if the Government should withhold the project due to the global financial crisis, Moggie said: “No, I don’t think so. This is a technical problem that we need to resolve. This project must proceed whether there is crisis or not.”