Charles Santiago

Posted: 05 Jun 2011 07:04 PM PDT

Source: Free Malaysia Today

Vinod | May 31, 2011

The current agreement is lopsided to guarantee huge profits to Barisan Nasional cronies, says MP Charles Santiago.

PETALING JAYA: DAP today urged the government to review the agreement that Tenaga Nasional Berhad (TNB) has with independent power producers (IPP), saying it was lopsided in favour of the latter and causing suffering to consumers.

Under the agreement, the IPPs are guaranteed 20% to 22% in returns on investments, according to DAP's Charles Santiago, the MP for Klang.

"For every RM1,000 they invest, they are assured of profits between RM200-RM220," he said.

He accused the government of victimising the public in order to maintain subsidies for its rich cronies.

Starting tomorrow, electricity tariffs will be raised by an average of 7.12% or 2.23 sen per kilowatt hour (kWh). Natural gas will rise to RM13.70 per British thermal unit (mmBtu) from RM10.70 and go up by RM3 every month until December 2015, after which market rates will apply.

Santiago said the current agreement between TNB and IPPs compelled TNB to purchase all electricity produced by the latter even if it is beyond its needs.

"TNB always ends paying too much to the IPPs, prompting it to hike up rates from time to time," he said. "The consumers are footing the bill for the excess power it purchases and the IPPs take home millions in profit."

On the gas rate increase, Santiago said the cost of production of per mmBTU was between RM15 and RM16 but that for the past two years, the IPPs had been paying only RM10.70 per mmBTU to Petronas.

"As of June 1, the IPPs must pay RM13.70 per mmBTU, but that also means Petronas is still subsidising about RM2 per mmBTU for IPPs," he said.

"In the end, the rich companies still get government subsidies while the poor get their subsidies removed."