19 February 2009
Independent power producers (IPPs) and Tenaga Nasional Bhd (TNB) do not derive any financial benefit from the subsidised gas price, according to Penjanabebas, the association for IPPs.
“This subsidy is actually intended to be for the benefit of consumers in the form of lower electricity tariffs,” it said in a statement today.
Penjanabebas said under the Malaysian IPP model, all fuel cost incurred in power generation are “passed through” to TNB.
“The national utility is then able to adjust the fuel cost component of generation in the final tariff charged to end users, as reflected in the recent electricity tariff adjustments,” it said.
“This fuel pass-through mechanism is an international norm for any independent power producing business where a power purchase agreement exists with a single off-taker and a single fuel supplier to enable the project to be financed,” it added.
The association said its clarification was in reaction to a statement by Penang Chief Minister Lim Guan Eng which said that Penjanabebas members are the direct beneficiary of the reported RM35.7 billion in gas subsidy.
It described the picture presented by Lim as “misleading and distorts the realities of the situation”.
On concerns raised by Lim in relation to a shortfall of gas domestically that has hampered investment inflows, Penjanabebas said that decisions related to the allocation and pricing of gas do not fall under its control. — Bernama
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