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COMPETITIVE BIDDING WILL BRING DOWN COST TO ELECTRICITY TARIFF

PRESS RELEASE
Date: 17 JULY 2018 (TUESDAY)

COMPETITIVE BIDDING WILL BRING DOWN COST TO ELECTRICITY TARIFF

Association of Water and Energy Research Malaysia (AWER) has been engaged in a battle with Energy Commission (ST) and Ministry of Energy, Technology, Science, Climate Change and Environment (part of it formerly known as Ministry of Energy, Green Technology and Water / KeTTHA) with regards to competitive bidding in power generation sector since 2014. More than 2/3 of electricity cost comes from generation sector. Unfortunately, direct negotiations were approved one after another for gas powered power plants and Large Scale Solar (LSS). Senior officers of ST and KeTTHA have repeatedly released misleading statements to justify their decision on direct negotiations.

Last week’s announcement by Minister of Energy, Technology, Science, Climate Change and Environment that the government (cabinet) will decide on cancelation of 4 power plant projects as well as reviewing few others, gave some hope in our battle against ST and KeTTHA.

AWER stands firm that we can only achieve affordable and equitable electricity tariff via fair and transparent competitive bidding. Building new power plants via competitive bidding was a promise stated very clearly in 10th Malaysia Plan (page 114) and 11th Malaysia Plan (page 7-40). Cancelation of power plants awarded via direct negotiation will only reflects the correct policy implementation.

At the same time, there will be vested interest parties pushing the agenda that the “investors will fear such action against businesses”. Frankly, investors wants value for money. Why would they want to operate in a country where electricity cost is unjustly priced due to failure to carry out competitive bidding? The action to cancel direct negotiated power plant awards without Power Purchase Agreement (PPA) and renegotiate the levelised tariff for power plants with PPA will actually benefit the investors via lower cost to electricity tariff.

The direct negotiations of several gas power plants and LSS will add additional cost more than RM 25 Billion and this cost is paid by consumers. Electricity tariff has multiplier impacts to goods and services price. Any unfair increase in electricity cost will hamper the government's effort to manage the increase in cost of living.

AWER reiterate that power plant construction and its costing poses huge cost impact to electricity tariff, competitiveness, good and services affordability, investors' confidence and nation building. We urge the Federal Government to investigate the following issues to be able to reduce overall cost impact to electricity tariff:
(i)    audit all approval processes and award letters for power plant in KeTTHA, ST and Sustainable Energy Development Authority (SEDA) from 2011 onwards;
(ii)    audit all Planning and Implementation Committee for Electricity Supply and Tariff (JPPPET) decisions, meeting minutes, documentations and presentations from 2012 onwards;
(iii)    handling of competitive bidding process for new power plants and documentation including how nodal points and land requirements (green field and brown field) are set;
(iv)    waiver of 49% foreign equity limitation for power plant;
(v)    extension process of old power plants and its bidding process;
(vi)    failure of SEDA and FiT (Feed-in-Tariff) to meet RE mix target; and
(vii)    SEDA’s mysterious set up process and lack of transparency in FiT mechanism.

In addition to the cancellation of projects, the Federal Government must take stern action against government officers that colluded to allow direct negations and caused the cost impact to electricity tariff to increase.


Piarapakaran S.
President
Association of Water and Energy Research Malaysia (AWER)

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 
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