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Ani Arope exposes power tariffs plot

Former Tenaga Nasional Bhd (TNB) Executive Chairman Tan Sri Ani Arope in his recently released 143-page book "Memoirs of Tan Sri Ani Arope" revealed how TNB was forced to ink the "too darn generous" power trade agreements with YTL for 21 years – from 1994 to 2015.

Following the blackout in 1992, which started the era of Independent Power Producers (IPPs), the Economic Planning Unit (EPU) "engineered" by then Prime Minister Dr Mahatir Mohammad forced TNB to surrender the land it had acquired in Paka (Terengganu) and Pasir Gudang (Johor) to a third party for 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 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.

"When you have a place with 250 engineers, it does not make sense to say (the blackout) is because of poor planning. But the EPU said it had its own plans and we were told to surrender the land," the Fulbright scholar replied when interviewed by Starbiz regarding what happened in the 1992 blackout.

According to Ani, TNB was producing electricity at 8 sen a unit (kWh) back then and delivered at 17 sen per unit.
However, the IPPs were producing electricity at 23 sen per unit, therefore TNB need to charge no less than 30 sen per unit.

The agreement leave 20 million guaranteed consumers (1994) with no alternative but pay for it.
"There was no negotiation; absolutely none. Instead of talking directly with the IPPs, TNB was sitting down with the EPU. And we were harassed, humiliated and talked down every time we went there.

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

He felt the deal was morally wrong and lopsided. He cited that: "If it is legal and not fair, I will not do it. If it is fair and illegal, I still won't do it. It has to be legal and fair.
Based on 2008 Petronas' annual reports, IPPs secured gas subsidy amounting to RM8.1 billion, whereas Tenaga Nasional Bhd (TNB) obtain RM5.7 billion.

The subsidy created more controversial as over 40% of overcapacity generated yearly goes wasted as Malaysia did not own the technology to store the supply.

"With the take-or-pay clause and with the 40 per cent excess reserve that we have today, one only has to produce half of one's capacity and be paid 80 per cent of the agreed capacity. Well done the then-EPU — Economic Plundering Unit," Ani added in a Facebook post.

PPAs (Power Purchase Agreement) virtually guaranteed IPP profitability with forever escalating costs that result in average consumers to foot the bill.

The contracts left TNB inefficient as majority of cost were spending from purchased electricity from IPPs. Estimated 92 billion (54% of TNB profit) was billed in 2005, follow by 190 billion (65% of TNB profits) in year 2010.

PPAs further battered TNB as its shares dropped sharply from 20 sen in 1993 diminishing to 10 sen in 1994. TNB was forced to raise the power tariff to retain the company profits.

The power producers are Genting Sanyen Power Sdn Bhd, Powertek Berhad, Segari Energy Ventures Sdn Bhd SEV 2nd, YTL Power Generation Sdn Bhd, Port Dickson Power Berhad, Ranhill Powertron Sdn Bhd, ARL Tenaga Sdn Bhd, TNB Janamanjung Sdn Bhd, Teknologi Tenaga Perlis Consortium Sdn Bhd, Prai Power Sdn Bhd, GB3 Sdn Bhd and Tanjung Bin Sdn Bhd.

IPP companies made billions since then. In 2010, Francis Yeoh's YTL Power made a profit of more than RM1.6 billion on revenues of RM13 billion. Ananda Krishnan's Powertek made revenues of RM1.34 billion

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