Why are we subsidising the profitable IPPs?

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Why are Malaysians – via Petronas – providing billions of ringgit in gas subsidies to the profitable IPPs?

And yet, the government is always complaining it has to pay so much in fuel subsidies for the people. What about the gas subsidies to the IPPs? The owners of the IPPs are not exactly poor. In fact, they are prominent billionaires.

So why is all the focus only on Tenaga, which is being squeezed in the middle?

That’s the question I tried to explore in this article for IPS.

ENERGY-MALAYSIA: Subsidising Gas to Private Power – State Utility Pays
By Anil Netto

PENANG, Oct 12 (IPS) – A staggering 27.6 billion ringgit (8.2 billion US dollars); that’s the amount the Malaysian public has incurred through gas subsidies given out over the years to private power producers by national petroleum corporation Petronas.

With oil and gas prices now soaring, the government – and Petronas – is feeling the pinch of higher fuel and gas subsidies. Petronas has proposed a removal of gas subsidies for electricity production, but much of the attention has focused on the impact it would have on state power firm Tenaga Nasional Berhad. Full article

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kusoh

ask tun mhathir why tnb has to buy expensive elecctricity from ipp’s , and petronas has to sell cheap gas to ipp’s since 1990’s…the ipp’s are so so fabulously rich…….

Anony

High capacity charge is only part of the problems. Pass through fuel price risk is not that bad. Just extend the goverment kindness to TNB as well. Subsidizing the fuel price, I think, in Malaysia’s contactual is not be the major problem. The major problems are TNB and consumers have to pay for excess capacity that they don’t require at all and they have to pay about 25-30% higher cost per kWh electricity sold to some of the IPPs. The first generation PPAs have protected IPPs from market risk at the expense of TNB. Assuming the total electricity demand drops… Read more »

KLDude
Don

How many actually know that we the public are being shortchanged?
Maybe they do have some idea but not the scale.
Someone needs to wise them up before the next elections.