Anwar uses IPP contracts to attack Najib administration

By Lee Wei Lian

June 01, 2011

In a forum today, Anwar said that a revision of the contracts was the “minimum” that the government was expected to do. — file pic

SELAYANG, June 1 — Datuk Seri Anwar Ibrahim piled pressure on the Najib Administration over the rising cost of living and pressed the issue of the country’s increasingly unpopular Independent Power Producers (IPPs), claiming that that the government’s apparent reluctance to renegotiate profitable power purchasing agreements reflected the “stranglehold” of the IPPs.

Anwar also revisited history and referred to an interview that former Tenaga Nasional Berhad (TNB) chairman Tan Sri Ani Arope gave The Star newspaper in 2006 where the latter claimed that there was virtually no negotiation and TNB was “humiliated” by the Economic Planning Unit (EPU) and directed to accept terms and conditions that were “grossly unfair.”

This comes after the government raised the price of electricity earlier this week, leading to concern that it would worsen inflationary pressure.

The Opposition leader alleged at a forum on public housing here today that the lack of attempts to renegotiate the power purchasing agreements showed how strong a “grip” the IPPs had over the government

He also said that a revision of the contracts was the “minimum” that the government was expected to do.

In his 2006 interview with The Star, Ani said that he was given no option but to buy electricity from the IPPs at rates far above what TNB was producing at and in excess of its actual needs.

“There was no negotiation. Absolutely none,” Ani said. “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.”

Ani also said that he had objected to the terms and conditions and was subsequently “put out to pasture.”

The former TNB chairman said that the national utility company was producing electricity at eight sen per kWh but was asked to buy from IPPs at up to 23 sen per kWh for a specific number of years and at a certain volume regardless of its actual requirements.

Ani claimed that one IPP had agreed to sell at 12 sen per kWh but was shot down by the EPU and had to eventually sell at 14 sen per kWh.

Ani also criticised the cost pass through mechanism.

“If the price of fuel went up, the extra cost is passed through (from the IPPs) to us. And in other words, it is passed on to the consumer,” said Ani.

MCA president Datuk Seri Dr Chua Soi Lek said on May 24, however, that the government had to honour the IPP contracts in order to preserve its credibility.

He noted that some of the agreements were due to lapse and the government could then start negotiations.

“Some were (signed) 15 years ago, some were 20 years ago,” said Chua. “So when the time comes for the agreement to lapse, that’s when the government starts negotiating.”