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TNB has to pay IPPs for excess power

YTL Power is only IPP with social obligation to use” pay for use” formula, meaning YTL does not selling excess electricity to Tenaga for the sake of selling.

Tenaga has to pay one billion for excess capacity generated by just a single company, let imagine how much Tenaga has to fork out for all IPPs. As reported Tenage is holding at about 40% excess capacity mostly generated by IPPs. And you cannot store electricity for the next day, where electric current has to be drained off to earth regularly.

This is only a side of the coil where our money (Tenaga is owned by government!) is wasted for compensating “excess capacity” not utilized by our consumers.

Another side of the coin is Petronas has to subsidize cheap natural gas for IPPs which is costing Malaysia government another few billion ringgit.

In a nutshell, total money wasted for excess capacity = TNB compensation (2008: 4 billion) + Petronas subsidy (2006:5 billion)

For clarity, I calculate Petronas gas subsidies for IPPs in 2006 is about 5 billion RM (35.7%  out of 14 billion) [Source:]

A shocking fact is Malaysia is wasting at best estimated of 9.5 billion each year for generating  excess electricity capacity which is down to drain for nothing.

The lesson is UMNO politicians and their cronies are stealing our money LEGALLY through IPP scheme. These cronies may only get one to two billions as net profits, but we rakyat have to pay umpteen more for wastes such as CO2, excess machineries, operating expenses, etc. for generating excess capacity.

In another word, Malaysia burns 9 to 10 billion each year in order for UMNO cronies to collect 2 billion profits.

This kind of  “boleh” thing  can explain why Anwar Ibrahim dared to promise RM 10 billion for free education for all rakyat if PR forms a new government. He knew exactly Malaysia is burning out 9-10 billion ringgit for CO2 greenhouse gas each year, a goldmine awaiting for him to tap for his free education funds.


KUALA LUMPUR: Tenaga Nasional Bhd (TNB) has to fork out RM500mil over the next eight months to pay for excess power it does not require now.

By January, it has to pay the owners of the Jimah power plant in Negri Sembilan the amount in capacity payment when the 1,400MW independent power producer (IPP) starts operations.

TNB president and chief executive officer Datuk Seri Che Khalib Mohd Noh said the IPP was starting operations “prematurely” as the capacity was likely to be required in 2011 to 2012.

TNB owns 20% of Jimah Energy Ventures Sdn Bhd (JEV), the owner of the plant, while the remaining stakes in JEV are held by parties related to the Negri Sembilan royal family.

The RM500mil is on top of the RM3bil capacity charges that TNB pays IPPs every year.

Given that talks with IPPs had failed in the past, TNB would either have to bear the cost or pass it on to consumers. The full year payment to Jimah could amount to RM1bil.

Che Khalib said that from October to November, power demand grew at 2% year-on-year, adding that demand may fall next year as the economy contracted.

“Come January, we will see the full impact from the global crisis. January and February will be the telling time of any reduction in demand,” he said, adding that three sectors – steel, cement and semiconductor – had already shown significant contraction in demand for power.

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Observer says:


YTL Power is only IPP with social obligation to use” pay for use” formula, meaning YTL does not selling excess electricity to Tenaga for the sake of selling.

That’s not true. YTL is the only IPP with the “take-or-pay agreement” and YTL benefits the most out of all IPPs.

This statement is drawn from YTL’s public statement published in the Star.

Antares says:

Very useful data, thanks! Are you based in Muar? I studied there for 6 months. Still miss the oyster omelette 😉

I am in KL right now, may be moving back to kampong soon by having a virtual office.