IPPs - yet another Dr M mistake
Jun 9, 06 5:35pm

Can former prime minister Dr Mahathir Mohamad explain why he approved such generous contracts to the independent power producers (IPPs) which cost the country billions of ringgit? That’s the question on everyone’s lips after former Tenaga Nasional Berhad (TNB) chief Ani Arope told The Star that he was sacked in 1996 for refusing to sign the grossly unfair deal with the IPPs.

In the June 6 interview, Ani said that TNB was “harassed” by the government’s Economic Planning Unit to ink the one-sided Power Purchasing Agreements (PPAs) deal. “They said you just take it and I refused to sign the contracts. And then, I was put out to pasture,” he said.

When asked how the IPPs were created, he gave a terse answer: “Ask our previous prime minister (Mahathir).” DAP secretary-general Lim Guan Eng said that Mahathir should respond to the former national power utility chief’s accusations. “The PPAs are the cause of the huge losses faced by TNB where TNB is forced to pay RM3.3 billion in capacity payments annually for power it does not use or sell.

“Such huge payments has given TNB one of the highest reserve margin in the world of 40% as compared to China’s 5%, Japan 5% and Europe 5%. To sustain and protect the profits of IPPs, 27 million Malaysians have to pay 12% increase in tariff hikes as well as higher inflation,” he lamented. Many more questions But Lim has more questions for Mahathir.

According to his estimates, national oil company Petronas has earned RM500 billion in profits over the past 32 years. He claimed that much of the money has been misused, among others, to pay for:

The RM5 billion losses suffered by national steel company Perwaja.

The failed attempt in 1981 to corner the London tin market through Maminco, causing losses of nearly RM400 million when tin prices plummeted in 1982.

The RM2.5 billion bailout of Bank Bumiputra to cover its losses in 1984. The government bailed out the bank again in 1989 and in 1998 by another RM2 billion.

The RM10 billion losses suffered by Bank Negara in 1992 after speculating in the forward foreign-exchange market.

The RM1.8 billion shares buyout bailout of Malaysia Airlines executive chairman Tajudin Ramli 29% stake in 2000 at RM8 per share, which was almost three times the market price.


Lim said that the RM40 billion in Petronas earnings this year should be not be misused for mega-projects but instead distributed to the people of Malaysia. “Every needy Malaysian would receive at least RM2,000 each a year or for a household of five, RM 10,000. At times of inflation when everything is rising, including the crime rate, only our salaries do not go up. The time has come to alleviate the sufferings of the people and reduce their financial burdens by distributing Petronas oil revenue to 27 million Malaysians,” said Lim.

Police report lodgedMeanwhile, PKR Vice-Youth chief Shamsul Iskandar Mohd Akin has called on the government to investigate Mahathir's allegations, especially on the abuses of the Approved Permits (APs).

He said that the findings of such a probe should be made public and those responsible prosecuted for corrupt practices.

Shamsul added that PKR had lodged a police report on the cavalier way in which government's money was spent especially in the development of the administrative capital, Putrajaya, which was largely funded by Petronas.

"We lodge this report for we believe that the sufferings of the people, especially due to the increase in fuel prices and electricity tariff, should be quickly addressed by the present government by being more responsible and transparent in spending government's money."