Focus View
Come clean on power tariff deals
FocusM team | 19 May 2017 00:30
TENAGA Nasional Bhd recently inked an agreement with SIPP Energy Sdn Bhd to acquire a 51% stake in the latter’s special purpose vehicle Southern Power Generation Sdn Bhd. SIPP retains the remaining stake.

The deal raised eyebrows as in 2014 Tenaga and SIPP partnered with YTL Power International Bhd to bid for and win a contract to build a power plant in Pasir Gudang, Johor, better known as Project 4A.

YTL Power dropped out of the deal. A little later, SIPP and Tenaga also ended their union after the Energy Commission (EC) rejected their levelised tariff proposal. Reports then suggested that the consortium’s proposed tariff was on the high side. But that wasn’t the end. In September last year, Tenaga entered into a 21-year power purchase agreement (PPA) with SIPP. Again, there was no word on the tariff.

The issue of transparency in tariffs arose again when YTL Power recently signed a new PPA with Tenaga for its Paka power plant. There was no mention of the tariff agreed between the two parties.

The EC must disclose what the levelised tariffs are for any PPA. After all, that tariff will determine what the ultimate cost will be to consumers as a higher levelised tariff could mean higher electricity charges.

It is understandable that different projects will garner varying tariffs. But how does the public determine if it is getting the most competitive rate?

Thus, the EC must not only disclose the tariff rates but also explain why the rate is justified in any particular power project. In that way, there will be no accusations of favouritism or misconception.

Also, being listed companies, Tenaga and YTL Power are answerable to minorities. Shareholders would want to know if their company secured a good deal and how it will contribute to the bottom line.

Tenaga, especially, is not only answerable to its shareholders but also the public at large as it determines the power tariff to consumers via the imbalance cost-pass-through mechanism.

So in the public interest, the EC should disclose the levelised tariff for every deal. It is, after all, a government commission serving taxpayers.