The Malaysian Insider
Jun 12, 2011

KUALA LUMPUR, June 12 — Following growing calls for power purchasing agreements to be reviewed, Datuk Seri Ahmad Husni Hanadzlah today announced that a Cabinet committee has been formed to evaluate the matter.

“The committee will study various aspects (of power supply) and not just the [independent power producers] problem… among them (production) costs and (requirements for) the future because there are IPPs whose concession is due to end in 2014 and 2015,” Ahmad Husni was quoted by Bernama Online today.

The second finance minister also stressed that the committee will take a birds-eye view of subsidies and not be focussed primarily with the power deals or the producers.

“We have not been given any deadline for submitting the report, but what must be stressed here is that it will give priority to the interests of the people,” he said.

It remains to be seen if the committee will be enough to assuage lawmakers calling for a royal commission of inquiry (RCI) to probe the lopsided power deals between Tenaga Nasional Berhad (TNB) and the IPPs.

First to sound the call yesterday was Gua Musang MP Tengku Razaleigh Hamzah, who 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.

Today, the Umno stalwart found support in DAP, when the secretary-general Lim Guan Eng added his party’s voice to that of the Kelantan prince.

“The RCI would determine how severely the lopsided deals are burdening consumers with the rise in electricity tariffs and introduce measures to either reduce or remove this huge financial burden on the people,” Lim said 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 aid while leaving gas subsidies to power producers — to the tune of RM19 billion this year — largely untouched.

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