The Malaysian Insight

THE purchase of independent power producers (IPPs) by 1Malaysia Development Bhd five years ago did not raise the electricity tariff, Dr Maximus Johnity Ongkili (BN-Kota Marudu) said today.

The energy, green technology and water minister told the Dewan Rakyat that as part of 1MDB’s acquisition of Tanjong Energy Holdings Sdn Bhd (now known as Powertek Energy Sdn Bhd), Kuala Langat Power Plant (previously known as Genting Sanyen) and Jimah Power in 2012, it maintained the tariff rate as finalised in the power purchase agreement (PPA).

“The change to electricity tariff has nothing to do with 1MDB’s acquisition of the IPPs,” he said in reply to Tony Pua (DAP-Petaling Jaya Utara) who asked why electricity tariff hadn’t gone down since 1MDB’s purchase of the IPPs.

Electricity tariffs for the peninsula are determined by the incentive-based regulations (IBR) framework, involving two components, namely the ICPT and base tariff. The base tariff is to cover all costs related to the supply of electricity to consumers.

Last month, 1MDB refuted Pua’s claim that its takeover of IPPs had increased electricity tariff. 

“As Pua well knows, the PPA tariff is only one component of the electricity tariff, with other components being fuel costs, transmission and distribution costs, etc.

“It is a fact that 1MDB generated competition during PPA bidding for new power plants and renewal of PPA contracts for existing power plants,” it said. 

The next round of electricity tariff revision for the peninsula will be in January.

On June 30, the government agreed to spend RM1.303 billion to cover the rising cost of fuel and electricity supply generation in the peninsula from July to December.

A tariff revision is done every six months by the Energy Commission as required under the imbalance cost pass-through (ICPT) policy. – November 9, 2017.