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Wednesday, June 1, 2011

Who are the Robber Barons of Malaysia

By Ismail Dahlan | Malaysia Chronicle

Electricity has just gone up by an average of 7.1% for household consumers. For business it is an average 8.3% hike. However if you use less than 300 kilowatts which would work out to a RM77 monthly bill, you will not be affected.

Which means 75% of household users will not get a higher electricity bill. If you fall into that category, and think this is good news, you would be very wrong. When costs go up for businesses, the cost of their products go up. You will be paying for the business tariff hike. All your essential supplies, and all non-essentials are going to cost more. Nobody is spared.

And the reason you are paying more for electricity has nothing to do with any global event, as the BN would like you to believe. The reason you are going to have less money in your pocket is the incompetence, inefficiency and corruption of the Barisan Nasional government.

There are two types of electricity markets in the world, regulated and deregulated ones. Regulated ones would have a single, usually government-owned entity which would be responsible for the four key areas in the electricity business; Generation, Transmission and Distribution and Retail. Naturally monopolies were inefficient. The idea behind deregulation is that having private companies focus on the Generation and Retail areas would increase efficiency and reduce the cost to the consumer.

Read only if you need to know more :

• Generation is the process of producing electricity from fuel like natural gas or coal. In Malaysia, natural gas is widely used and IPPs buy it at a subsidized rate from Petronas; subsidies amounting to RM19 billion in total.

• Transmission is the process of transmitting electricity from the generator to the sub-station near your house via the National Electricity Grid.

• Distribution is the process of transferring the electricity from the substation to your house.

• Retail is where they bill you for the electricity for your house. In some countries this is deregulated where you can buy electricity from different, competing, companies though it comes from the same source. In Malaysia, TNB is still responsible for it.

Tycoons behind the IPPs

Electricity deregulation really started in UK in the early 1990’s. It spread worldwide and Malaysia too deregulated, but only its Generation business. This was done by giving licenses to Independent Power Producers (IPPs). Which should have resulted in reduced electricity cost to the consumer.

But that’s not what happened. In Malaysia’s topsy turvy wonderland, deregulation increased the cost to the consumer! This was because Tenaga was forced to buy electricity from IPPs who charged more for the electricity than if Tenaga produced it itself!

It was the BN government that ‘negotiated’ such deals with the IPPs. Either they are criminally incompetent, awfully stupid or they are corrupt. You may take your pick. It may be a combination of all three.

So who are these IPPs? Genting Sanyen, YTL Power, Malakoff, SEV, Prai Power,Powertek, GB3, Tanjung Bin Power and Kapar Energy are among the two dozen or so IPPs in Malaysia. All of the above are owned by the Genting Lims, Francis Yeoh, Syed Mokhtar and Ananda Krishnan. The usual suspects, of course. The connected businessmen who get most of the big deals. Who will know how to take care of their political benefactors.

YTL Power’s profit for 2010 was more than RM1.6 billion on revenues of RM13 billion. Malakoff in 2009 had a profit of RM380 million on revenues of RM5.6 billion. Powertek had revenues of RM1.34 billion and a profit of RM450 million.

So Francis Yeoh makes RM1.6 billion and Ananda Krishnan makes RM450 million from his IPP while collecting subsidies from public money. It is essentially a transfer of funds from the people’s pockets to the IPP’s vaults, through TNB, aided and abetted by the BN.

When this economic joke of a system is about to come crashing under its own silly weight, the BN solves the problem by raising the electricity tariffs, making Malaysians pay for it.

Now here is a strange thing, Thai power producers do not get subsidies. They have to buy fuel at market prices. We know that petrol costs more in Thailand, which is why they are always trying to fill up their tanks in Malaysia. So does gas cost more in Thailand. Despite this higher cost of fuel, Thai power producers sell electricity at a lower price than Malaysian IPPs sell to TNB. Ask the BN, and they will tell you that there is clearly something wrong; with the Thais! Why aren’t they trying to grab as much public money as possible, as fast as possible like us; the BN no doubt wonders.

TNB is a GLC, declassify the contracts

Meanwhile, Malaysian’s own version of medieval German Robber Barons (who were known for extorting huge tolls from passing ships and travellers), get to keep their subsidies, and, their unnatural, undeserved profits. They are despicable fellows who prey on the helpless. Big business, controlled in Malaysia by a small number, are now become adversaries of the people. They extort unbearable tolls and they bankroll and prop up a regime that is beggaring the nation. No longer can they fake innocence and hide in the shadows.

TNB had a profit of RM4.1 billion on revenues of RM32 billion in 2010. This is not enough? They still need to raise the electricity tariffs? Why further burden a nation that is already reeling from rising prices. Che Khalib, their CEO, had a big smile on in today’s newspapers. He will get a bigger bonus this year. You will get a higher electricity bill and will pay more for everything else. You will suffer, Che Khalib and his bosses will celebrate. That’s life under the BN’s incompetent, corrupt thumb.

As what can only be considered a joke, TNB’s theme for their 2010 annual report was “Powering A Sustainable Future”! In it, they claim to be committed to ensuring transparency in all they do. In which case, they should immediately make public the IPP contracts. But they will not, because it is clearly a dirty secret. A secret so ugly perhaps, that it alone could cost BN the election. No transparency here, just false slogans. Peter Chin, under whose Ministry TNB is parked, claims that he cannot release the IPP contracts because it is between two private entities. But TNB is not a private entity, it is mostly government-owned. And the subsidies given to the IPPs are not private monies, they are public funds!

Another 5 years of the Barisan’s rule, and Malaysia will become an economic basket case. Where ruthless connected businessman live off a suffering citizenry while cosying up to the ruling elite. Where greed and self-serving politicians and policies are the order of the day.

If there is to be change, it had better be now.

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