KUALA LUMPUR, July 14 – Tenaga Nasional Berhad (TNB) Friday said it had no problem with the government’s decision to cancel four new Independent Power Producer (IPP) contracts.
Speaking to reporters after meeting the Council of Eminent Persons (CEP), TNB CEO Azman Mohd said he believed competitive bidding for contracts would be best.
“The minister has said it quite well and so we agree with her view on that, on the transparency of the tender process.”
Energy, Technology, Science, Climate Change and Environment Minister Yeo Bee Yin yesterday announced the cancellation of the IPP contracts which were approved by the previous government.
She said another four IPP contracts, also for new projects, would be reviewed to determine the viability and costs involved.
“The prime minister (Dr Mahathir Mohamad) suggested these eight IPPs which were awarded through direct negotiations be reviewed.
“For certain reasons, the previous government (under Barisan Nasional) approved a lot of IPP contracts through direct negotiation (or) direct award to build up the country’s capacity, and users need to pay for that capacity.
“Because of this, the new government is actually reviewing many of these IPP contracts,” she had said.
Asked whether reforms in the industry could bring down tariffs, Azman said there was “room for improvement”.
“But the driving cost factor is fuel prices which are beyond TNB’s control.
“Coal and gas prices fluctuate according to global pricing and this needs to be managed and handled. This is a challenge not only for Malaysia but globally.”
Agreeing on the need to re-look the industry, especially power plants, he said a balance had to found between security of power supply, affordability and sustainability.
On the meeting with the CEP, he said they exchanged views on how to go forward in the power industry.
“CEP was open to listening to our views. We are pleased to be sharing ideas with them. We can work together with the government to provide the best value to Malaysia.”