Anwar - Power tariff should go down, not up....

Amid talk of an electricity tariff hike, Opposition Leader Anwar Ibrahim argues that the tariff should in fact be lower than prevailing rates.

More interestingly, in a statement today, he said that contrary to popular belief, the rates should drop even if gas subsidies are cut.

However, Anwar said, this would require a revision of the “lopsided” agreements with the independent power producers (IPPs), particularly the first generation IPPs, that had been “forced” on Tenaga Nasional Bhd (TNB) .

According to the man who was finance minister when the agreements were brokered, IPPs are currently producing electricity at a cheaper price as they use subsidised natural gas, but force TNB to buy at a “bumper price” of 13.7 to 15.5 sen per kWh.

To subsidise the gas used by the IPPs, which he claims are companies of “well-connected businessmen and cronies”, the government is blowing an estimated RM22 billion hole in its pocket.

“The final result of this complex and lopsided agreement is a relatively disproportionate high electricity tariff paid for by the Malaysian public,” he said.

Thai IPPs get no subsidy, but tariffs much lower By way of comparison, he said Malaysian households are paying 22 percent more than Thai users, whose power producers buy natural gases at market rates.

At present, market price for natural gas is three times higher than that enjoyed by the Malaysian power generators.

“Similarly, retail customers under the category 'low voltage commercial tariff' also pay... 48 percent higher than Thailand's 25 sen per kWh,” he said.

Minister in the Prime Minister's Department Idris Jala earlier this month told Malaysiakini that the government will review the subsidies given to the IPPs as the contracts are expiring. The government, through then energy and green technology minister Shaziman Mansor had in 2006 attempted to review the IPP contracts but no revision was eventually made.

Industry sources have been reported to have said that electricity tariffs will increase next month following subsidy cuts.

source:malaysiakini

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cheers.