By Stephen Ng
Malaysiakini
Oct 11, 2013

In his book published by the Fulbright Alumni Association of Malaysia, former Tenaga Nasional Bhd (TNB) executive chairperson Ani Arope reveals how, after the landmark blackout in Peninsular Malaysia in 1992, TNB was forced to surrender the land it had acquired in Paka (Terengganu) and Pasir Gudang (Johor) to a third party for power plants.

This started the era of the independent power producers (IPPs) and the first was YTL Power Generation Sdn Bhd.

This was followed by a slew of other IPPs – Powertek Bhd, Genting Sanyan Power Sdn Bhd, Segeri Energy Ventures Sdn Bhd, Malakoff Bhd, Tanjung plc, EPE Power Sabah Energy Corp, Alpha Intercount’l Bhd, Sutera Bhd, Cergas Unggul Sdn Bhd and Ekran Corp.

Although Ani, who is Malaysia’s first Fulbright scholar, had felt that the power purchase agreements with YTL for a period of 21 years – from 1994 to 2015 – were “too darn generous”, he was pressured to ink the deal, which had been drafted by the Economic Planning Unit (EPU).

Then prime minister Dr Mahathir Mohamad was the man who “engineered” the rise of IPPs.

“There was no negotiation; absolutely none. 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 reveals in his recently released memoirs.

Ani, who was under a lot of pressure to sign the agreements, felt the deal was morally wrong and lopsided.

“If it is legal and not fair, I will not do it. If it is fair and illegal, I still won’t do it. It has to be legal and fair,” he says.

Sharp hike in power tariffs

According to Ani, TNB at that point was producing electricity at 8 sen a unit (kWh) and this could be delivered at 17 sen per unit.

However, the IPPs were producing electricity at 23 sen per unit, therefore TNB would need to charge consumers no less than 30 sen per unit.

Now that the first agreement signed will be coming to an end in 2015, Ani said renegotiations should take the need to bring down the capacity charge into consideration.

“Anything above the 15 percent reserve margin, we will call for bids,” he suggests.

“The second thing is that the IPPs would have, by now, paid up their whole capital investments in their plants and it is all gravy (or profit) from now.

“Could we not bring this down a bit? Instead of paying a small amount to (a special fund), why not increase the (payment) for future planting up? In that manner, we can control the price of electricity. Otherwise, it’s going to escalate.”

The renegotiation, he added, should involve all major stakeholders, including TNB, the IPPs, consumers and the Energy Commission.

‘Memoirs of Tan Sri Ani Arope’ is a 143-page book that is easy to read and will be available in major bookstores nationwide soon.

It had a soft launch during Fulbright’s 50th anniversary dinner in July this year by its president, Professor Dr Gendeh Balwant.

STEPHEN NG is a chemist by training. He dealt with printing ink, paint and emulsion polymer for 15 years before becoming a freelance writer.