Was the 1992 blackout ‘planned’ to create private power generation firms?

Was the 1992 blackout across wide swathes of the nation avoidable? Was it to pave the wave for the privatisation of TNB?

Selangor Kini, bearing the copyright of the Selangor state government, has published a report about former TNB CEO Ani Arope’s memoirs in which he claims the 1992 blackout need not have occurred as TNB had already made plans to expand capacity to meet future demand.

It was the disastrous privatisation of TNB that led to lop-sided concession agreements being signed with well-connected private firms, resulting in their earning billions of ringgit – often at TNB (and the rakyat’s) expense. While the IPPs prospered from these agreements and danced like butterflies, TNB staggered and stumbled, a once-proud heavyweight champ, bleeding red ink from a cut below the eye and now hanging on for dear life. The rakyat groaned as they felt the blows from each tariff hike.

In the light of former TNB chief’s allegation, a high-level independent commission of inquiry has to be set up to investigate in depth the events of the early 1990s.

Well done to Ani Arope, who happens to be an old Xaverian, for highlighting this. The last words from the school anthem “sons of St Xavier’s valiant and true” could not be more apt.

Former CEO of TNB reveals 1992 ‘Blackout’ was the government’s plan to create IPPs

KUALA LUMPUR, 22 May: The ‘Blackout’ incident that happened across the country in 1992 was a plan aimed to create Independent Power Producers (IPP) in the country.

The former Chief Executive Officer of Tenaga Nasional Bhd (TNB), Tan Sri Ani Arope, revealed this in his 143-page book ‘Memoirs of Tan Sri Ani Arope’.

The book tells the beginning of IPPs.

The Economic Planning Unit (EPU), which was under the power of Dr Mahathir Mohamad at the time, forced TNB to hand over land in Paka, Terengganu and Pasir Gudang, Johor, to third parties to construct power plants.

“TNB had plans in place to pump out more energy by building plants in Pasir Gudang and Paka. Financing was no problem and our credit standing was very high. We had the land acquired and were ready to move in and plant up.

“But we were told by the Economic Planning Unit (EPU) that it had its own plans. We cautioned EPU that if those plants, which would take two years to complete, were not built, Malaysia would get another major blackout,” he said.

He said this in an interview with Starbiz recently about what actually happened in 1992, quoted by Keadilan Daily.

He said that when they have a place with 250 engineers, it does not make sense to say (the blackout) is because of poor planning.

Ani said that TNB produced energy at 8 sen per unit (kwh) and could deliver electricity at 17 sen per unit. After the event however, IPPs produced electricity at 23 sen per unit, causing TNB to charge the consumer at no less than 30 sen per unit.

He said that there was no negotiation and the agreement resulted in 20 million consumers in the years to have no choice but to pay higher electricity tariff.

“After that, my team was disappointed. The EPU just gave us the terms and asked us to agree. I said no way I would,” he said, and he was forced to resign shortly after the incident.

He thought that the agreement was morally wrong and unfair.

Based on the Petronas annual report in 2008, IPPs received gas subsidies amounting to RM8.1 billion, while TNB received RM5.7 billion.

This caused TNB shares to plummet from 20 sen in 1993 to 10 sen in 1994.

TNB raised the electricity tariff to maintain profitability.

Source: Selangor Kini