IPPs: A case of the poor subsiding the rich

Malaysiakini Your Say | May 26, 11

‘Why is it that one minister called it ‘subsidy’ but another minister said it is not. This is ridiculous BN ways at work.’

Chin’s ‘savings, not subsidy’ remark shocks DAP

Onyourtoes: I think both Penang Chief Minister Lim Guan Eng and Energy, Green Technology and Water Minister Peter Chin are missing the fundamental issues on IPPs (independent power producers):

There is no doubt Petronas sells gas to the IPPs at a fixed and subsidised price. The question we have to ask is: Did Petronas’ subsidy pass down to the consumers in the form of lower electricity and energy tariffs?

If so, how much of the lower price enjoyed by ordinary consumers is due to Petronas’ subsidy?

All IPPs buy gas at pre-determined price and they sell the electricity generated to TNB also at pre-determined price. The quantity is also fixed, irrespective of whether TNB needs the energy or not.

Hence, all IPPs are actually doing a risk-free business. If the business is risk-free, do they deserve to make the rates of returns they are enjoying now? The theory of risk-return trade-off must apply here.

It is my humble opinion that IPPs are making returns excessive to and incommensurate with the risk they have to bear. We, the people, therefore not only have the right to ask IPPs to make lower profits, we also have the right to demand they return the excessive profits made in the past.

All these moronic agreements with IPPs are due to that Dr Mahathir Mohamad. The MCA president has said IPP agreements are sacrosanct and untouchable. We probably know the reason why.

The IPPs association is a powerful and rich lobbying group. We are never short of prostitutes in three-piece suits.

EugeneT: Peter Chin is only twisting words to sound nicer. A RM19 billion ‘subsidy’ or ‘forgoing profit’ or ‘savings’ or whatever terms BN uses, it is still a RM19 billion loss.

At the end of the day, Malaysia lost a lot of revenue and the rakyat suffer from the unfair contract.

Mt KK: I just cannot understand Chin: is he so naive that a simple thing called subsidy is so difficult to understand or explain? Let him go back to primary school to learn English again.

Pemandu chief Idris Jala explained lately that the subsidies given to independent power producers (IPPs) are up for review. Why is it that one minister called it ‘subsidy’ but another minister said it is not.

This is ridiculous BN ways at work. Better change or be changed.

Hoon Lim: We have come to a time where the poor are subsidising the rich. That’s what happens when the country has been corrupted.

Loyal Malaysian: Opposition Leader Anwar Ibrahim has given us a comparison of the electricity tariffs in Thailand: there, without the so-called fuel subsidies to the IPPs, the citizens actually pay lower rates. What say you, Chin?

Playfair: Is it also not the same Peter Chin that is screwing up the Selangor government on the water restructuring scheme so that the Umno cronies who have amassed wealth and created risk-free revenue flows by imposing high tariffs and price increases for the supply of water to us?

Poppyie: Gas subsidy is almost all enjoyed by IPPs as their power stations are all fired by gas, whereas TNB power stations are fired by gas, coal and water (hydro).

What come may, TNB has to operate as it is the aorta vein to the IPPs for TNB has been moulded into the sacred PPA (power purchase agreements) as the paymaster so as to make the deal bankable.

Thus TNB has to live on borrowing and more borrowing, and currently TNB is sitting on a RM21 billion debt while the IPPs are enjoying an annual return of more than 25%.

With TNB posting about RM2 billion net profit and with more than RM4 billion annual capex (capital expenditure) and about RM21 billion debt, there is no way TNB is going to clear the bulk of its loans.

What TNB is doing is to pay the matured loans and get new loans so that the IPPs can continue laughing all the way to the bank. We must ask the ‘kung fu’ master of ‘piratisation’ on how to put TNB back in black.

Anonymous_40dc: Savings for IPPs and TNB? Come on, Peter Chin, you must be joking. It is more like gross injustice. It is a case of IPPs sucking TNB and, in turn, the rakyat, by making enormous profit.

Minister: Fuel prices to stay, for now

Righteous: Why talk about the easy way out – reducing subsidies, increasing taxes – while being so silent on leakages, corruption, commissions for God-knows-what services rendered, rent-seekers, expensive you-help-me-I-help-you buy-elections, syphoning from government-linked companies, etc.

I can go on until the cows come home, but they will not listen. ‘Kami diutamakan, rakyat dikemudiankan’ (We’re the priority, the people secondary) is the Umno’s motto, which also stands for ‘Untuk Melayu, Nanti Orang’ lain.

Rakyat Malaysia: There are other ways to reduce the deficit. Don’t always chop off the rakyat’s head and arms. BN’s internal corruption and wastage is high enough and I believe reducing these things will reduce the country’s deficit – much more than raising sugar prices, fuel prices and electricity prices.

How can the government ask the rakyat to bear the mistakes of the government, which does not control spending and wastage of funds and keeps on borrowing money under the name of Malaysians?

It is like borrowing money under another person’s name. When you default, who will bear the burden? The rakyat, not BN ministers.

BornInM’sia: Why the delay? Are they waiting for Perkasa’s input?

Ferdtan: No increase in fuel prices for now – before GE13. After winning the election, beware that BN may have two-fold increase to recoup the loss in subsidies.

Cannon: Domestic Trade, Co-operatives and Consumerism Minister Ismail Sabri would have us believe the administration have the people’s interest at heart. Pemandu chief Idris Jala is bushy-tailed pushing us the urgency of ‘subsidy rationalisation’ and defending his initiative with gusto. Has he not considered the people’s welfare?

So, why now the sudden brake on the fuel price increase? Answer: it has dawned upon the cabinet that it’s not in BN’s interest to time the fuel hike near the general elections. The rakyat’s interest is about the last thing in the mind of this heartless regime.

Wait until the elections are over. Malaysians will see the hooves, horns and tail come out.

KSN: The cabinet which is the government proper, is the highest decision- and policy-making body in the country. In our case, it’s even more powerful than Parliament, having delegated the decision on subsidies to another subsidiary, thus downgrading itself.

What is going on? The same thing should be said about the scholarship tragedy – also delegated.

PM Najib Razak chaired the cabinet meeting this morning. Did Minister in the PM’s Department Nazri Abdul Aziz and the Public Service Department (PSD) object? Were the PM and the entire cabinet overruled?

WCP: From the list of ministers in the National Economic Council (NEC), it looks like a mini-cabinet. Another eye-wash to hoodwink the people into believing that NEC decision may be better?

Fellow Malaysian: There’s little the government can do but to continue subsidising petrol sales to the public if the BN wants to win in the general election.

Even a five-sen rise will not go down well with the people as world spot rates of crude oil such as Brent, Nymex and Tapis have been dropping since a week ago. Our people are well-read nowadays and they get live news report and data at an instance.

I urge Najib and his band of cohorts not to blame the public for their so-called indulgence in ‘subsidised goods’. Who would want to pay more, especially for essential commodities like petrol?

In fact, the government ought to console themselves and assume responsibility for starting this unhealthy culture.

Rakyat Malaysia: Barang Naik! Bila Naik? Baru Naik. Berapa Naik? Banyak Naik.

  1. #1 by Winston on Thursday, 26 May 2011 - 4:20 pm

    Well, Uncle Lim, let me say very bluntly that Malaysians have brought all these serious problems upon themselves!
    By adamantly voting for a failed government at every general election!
    If not, we won’t be wasting so much time reading all these!!!
    And we would have been first world long, long ago!!!

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