PAKATAN IS SILENT?! WHAT HAPPEN?
EVER WONDERED WHY PAKATAN NEVER MAKE NOISE ABOUT THE IPP CRONYS ANYMORE?
They used to make this such a big big issue before but now quiet. Why?
Read on:
Previously, the now-dead Pakatan Rakyat said it will achieve annual savings of RM3.47 billion on Tenaga Nasional Bhd (TNB) payments to independent power producers (IPPs) if the coalition takes over Putrajaya in GE13 by reducing the Internal Rate of Return guaranteed returns to IPP form 19% to 10%. (see video)
This problem of lop-sided IPP deals to past cronys had been a big issue to Malaysians for years where tens of billions of ringgit of Rakyat (via TNB) and Petronas money was diverted to the cronies.
But in the year 2012, the govt had it's first ever open tender for IPP and together with 1MDB which bid the lowest price for each renewal or new IPP and forced the other bidders to lower down their bids dramatically, the govt did even better than what Pakatan promised!
Maybank proclaimed that the era of sweetheart deals for IPPs are no more and that the IRR for the IPPs are now at between 5%-6% - much lower than the previous 19% and even lower than Pakatan's promised 10%. Therefore, the savings per year to TNB is even greater than what Pakatan promised.
A tariff difference by even a single sen makes a huge difference over a 20-year concession period, for one IPP plant a single sen difference can reduce tariff costs by RM2.9 billion.
That is why you can see from the chart, TNB profits have now improved substantially - swinging from a loss to record profits and govt no longer need to compensate TNB periodically, which govt did with RM2.2 billion in 2012.
Since Khazanah, PNB, KWSP, Tabung Haji etc and most of the mutual funds have shares in TNB, the improved profits directly translates to money in the pocket for the Rakyat - instead of to the crony IPP owners.
But Pakatan also missed part of the story. They forgot that the tens of billions ringgit of gas subsidies that Petronas had to give the IPPs to keep rates to TNB lower.
The subsidized gas price (RM/mmBTU)_for electricity generation from Petronas went up from RM6.40 in 2008 to RM18.20 to 2016, a 3 fold increase. The market price was mostly above RM40 then.
These savings from better IPP deals have gone to reduced gas subsidies and increased gas revenues (in the billions per year) for Petronas without a similarly high increase in electricity prices in 2011 and 2014 - despite TNB making much bigger profits and Petronas saving billions per year.
There is little doubt that 1MDB had helped shake up the IPP industry with it's aggressive bidding in the first ever open tender for PPA in 2012 and also subsequent IPP bids where 1MDB was always the lowest qualified bidder for every IPP project it went into.
These savings from paying the previously very lucrative IPPs were then channeled into higher revenues for Petronas, TNB and eventually to the government and the Rakyat instead of to the profits of the IPP private owners.
And this is the same for the IPPs that were previously owned by crony (with lopsided deals and high gas subsidies) and now sold to China (without lopsided deals and lower gas subsidies).
The Life-Line Tariff for consumers who use up to 200 kWh/month affecting 70% of households have not changed since 1997. It is also GST-free.
Any change in your electricity bill is probably because you use much more electricity compared to before.
From the year 2010 onward, households with electricity bills below RM20 no longer pay a single cent. This benefit is still on-going.
So don't say that 1MDB or govt has not done anything good as tens of billions that would have gone to the IPP cronys EVERY year now goes to the govt and to the rakyat - this could easily amout to hundreds of billions of ringgit over 10 to 20 years.
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Here is a case study for YTL on how much guaranteed money those IPPs used to get in the past every year under the lop-sided deal: https://www.facebook.com/lim.siansee/posts/1745928368959283:0
Maybank's analysis in 2012: http://klse.i3investor.com/blogs/kltrader/18923.jsp
