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30 days to go to finalise Power Purchase Agreement (PPA) Renegotiation

30 days to go to finalise Power Purchase Agreement (PPA) Renegotiation
The PPA renegotiation has been dragging for a long time due to the tug of war between the government, Independent Power Producers (IPPs), and Tenaga Nasional Berhad. Will there be a people centric solution as promised by Prime Minister? Will IPPs continue to challenge Prime Minister’s pledge?
In the power sector, the government and the appointed negotiator worry too much on how businessmen (IPPs) will be affected due to renegotiation. In fact, the first generation of IPPs has already recouped their investment within 10 years. Now, government and the appointed negotiator should be more worried on how much investment will shy away if IPPs are continuously protected and the future tariff remains uncompetitive due to this. A businessman knows how to do business; the renegotiation is also part of the business. It makes businessmen competent and ethical. Association of Water and Energy Research Malaysia (AWER) has also suggested a reasonable renegotiation solution in the report entitled ‘Survival: The Future of Our National Electricity Industry’ which was submitted to all relevant agencies for action this June.
AWER would also like to cite an example of renegotiation for Johor water services industry. With the implementation of Water Services Industry Act 2006, the renegotiation was done faster and prevention of huge tariff increase was achieved in year 2009. This was a renegotiated business deal concluded within 1 year period and there was no complaint about it!
AWER stands firm on the dateline we have suggested for the negotiator of PPA. 30th November 2011 should be the last date for renegotiation of PPA. If nothing concrete and people centric solution is not achieved via renegotiation of PPA, we urge the Energy Commission to start open bidding for new power plants beginning 1st December 2011. Rakyat definitely do not want any more reasons of not enough time to plant up or compromised bidding process or other unfavourable decisions.
Transparency in tariff setting as well as breaking up billing structure is vital. This is a simple process to be carried out as it involves database management. Breaking up cost of electricity is even done by our neighbouring countries like Philippines and Thailand. We do not understand why there is huge reluctance in achieving this by certain entities. We urge Ministry of Energy, Green Technology and Water (KeTTHA) to implement Incentive Based Regulation (IBR) with our proposed amendment (to regulate the whole generation sector) as soon as possible. IBR is intended to promote service efficiency and equitable tariff setting, just like the water services industry restructuring.
Under the Electricity Supply Act 1990 (Act 447), Energy Commission is given wide range of strong powers in regulating the entire electricity industry. Section 4 of the act which defines the functions of Energy Commission have very clearly indicated the mandate via subsection (b), (c), (d), (l), (la) and (m). Therefore, we urge the Minister of KeTTHA to ensure Energy Commission carry out its functions accordingly to protect the interest of all level of consumers.
Association of Water and Energy Research Malaysia (AWER)

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