TNB and IPPs

When Information Minister Ahmad Shabery Cheek and former deputy prime minister and de-facto opposition leader Anwar Ibrahim took the stage for the recent debate, the name of former Tenaga Nasional Berhad's (TNB) executice chairman was mentioned.
Anwar said that Tan Sri Ani Arope resigned because he was not in favour of the government' s stand on the independent power producers (IPPs). Tan Sri Ani was TNB's executive chairman from 1990 to 1996 and it was during his tenure that the first generation IPPs were created.
Tan Sri Ani is known for his honest and no nonsence way of doing things and former high court judge, Dato Syed Ahmad Idid justly described the Penang-born scientist as follows:
"Tan Sri Ani was and remains an upright person and had to suffer because he did not agree with the IPPs getting away with too much ... and consumers have to pay."
"I am not anti-IPPs per se. It is good to have other players but it has to be done fairly. It has to be fair to the consumers, not just TNB, which is a conduit. TNB, because of the electricity hike, has been treated as the whipping boy. The focus should be on the consumers," Tan Sri Ani once told StarBiz in an exclusive interview.
When the generous terms were given to the IPPs, Tan Sri Ani said all of his other peers around the world asked what was happening. They said they would like to have a share in the IPPs. They said (the contracts to IPPs) were "too darn generous."
When Anwar touched on the IPPs, Shabery Cheek replied that it was implemented when Anwar was Finance Minister. It is interesthing to note that in the StarBiz interview, Tan Sri Ani was asked "How was the Malaysian model of IPPs created?" and he answered "Ask our Prime Minister."
He was also asked "How was the process of negotiations with IPPs conducted?" and he replied: "There was no negotiation. Absolutely none. Instead of talking directly with the IPPs, TNB was sitting down with the EPU (Economic Planning Unit of the Prime Minister's Department). And we were harassed, humiliated and talked down every time we went there. After that, my team was disappointed. The EPU just gave us the terms and asked us to agree. I said no way I would."
Tan Sri Ani also said the pricing and terms of the contracts was all fixed up. "This is the price, this is the capcity charge and this is the number of years. They said you just take it and I refused to sign the contracts. And then, I was put out to pasture."
He described the terms agreed by the EPU as "grossly unfair." At 16 sen per unit (kWh) and with the take or pay situation, actully it was 23 sen per unit. With 23 sen, plus transmission and distribution costs, TNB would have had to charge the consumer no less than 30 sen per unit. If mix with TNB's cost, Tan Sri Ani said the cost would come down but that was at TNB's expense because the utility company were producing electricity at 8 sen a unit. "We can deliver electricity at 17 sen per unit," he said.
Tan Sri Ani also said that "nobody produces excess electricity like Malaysia and it goes to waste because there are no batteries to store that power. TNB only needs a reserve of 15 per cent to 20 per cent."
In the interview, Tan sri Ani told StarBiz that he felt sick of the process of awarding the IPP contracts. "It was morally wrong and not fair. If it is legal and not fair, I will not do it. If it is fair and illegal, I still won't do it. It has to be legal and fair. We work for the consumers, workers and shareholders. TNB is morally obliged to these three, but the consumers come first, otherwise we won't be around. It is then the workers and the shareholders."