The Malaysian Insider
Jun 10, 2011

KUALA LUMPUR, June 10 — Veteran politician Tengku Razaleigh Hamzah today called for a royal commission to probe Tenaga Nasional Berhad’s contracts with independent power producers (IPPs), saying the lopsided deals may be burdening consumers.

“The commission must investigate and propose the best suitable measures to be taken by the government to ease the burden to be borne by the consumers following the inevitable increase in the electricity tariff after the IPPs charged higher rates to TNB,” the Gua Musang MP was quoted by Bernama Online today.

The Cabinet raised power tariffs by an average of 7.12 per cent effective June 1, in a bid to trim a growing subsidy bill and widening fiscal deficit.

But the move has also thrown the spotlight on the purchasing power agreements that TNB is engaged in with the IPPs.

Opposition lawmakers have rounded on the Najib administration for wielding the knife on consumer subsidies while leaving the gas subsidies to the power producers — to the tune of RM19 billion this year — largely untouched.

The perception that the IPPs continue to enjoy the billion-ringgit subsidies courtesy of political patronage was reinforced when former TNB chief executive Tan Sri Ani Arope openly criticised the power purchasing deals as “economic plunder”.

Ani had caused a stir in 1996 when he chose to resign from his executive chairman post rather than sign the imbalanced deals, which saw the first generation of IPPs created.

“TNB is the whipping boy. TNB has no control of the price it has to pay to the IPPs. Get to the source of the problem,” said Ani.

Today, Tengku Razaleigh said it was crucial to tackle the issue of rising power prices before the effect begins to take bigger bites out of the average consumer.

“We have to be fair in solving the issue because the IPPs is making hefty profits at the expense of TNB, besides getting subsidised rate from Petronas,” he said.

The power purchasing agreements between TNB and the various IPPs are classified under the Official Secrets Act.

Energy, Water and Green Technology Minister Datuk Peter Chin also maintains that the government is powerless to reveal the contents of the agreements.