IPPs: Will Ani Arope talk?

IPPs: Will Ani Arope talk?

The 'crooked vision' of the IPPs... ( 3 )

Yesterday, StarBiz carried a series of stories on the IPPs (Independent Power Producers):

- IPPs seek extension of concessions
- Mixed views on status of Bakun dam
- Khazanah boss explains role
- Profile of IPPs

It seems the stage has been set for the IPPs -- the Syed Mokhtars, the YTLs and the AKs -- to take a lower income by means of adjusted capacity and energy charges to Tenaga Nasional Bhd (TNB). But the IPPs will also demand to have their respective tenures extended, much in the same manner expressway concessionaires got the toll tenure lengthened without giving the country anything extra in return.

StarBiz says the IPPs will 'speak with one voice', but I say they will 'gang up' to negotiate against TNB and the government, though the latter own equity in some of the IPPs through intricate share structures.

According to StarBiz, negotiations between TNB and the IPPs for supplementary agreements on their present power purchase agreements (PPAs) have yet to begin, the IPPs are already lobbying to extend their 21- or 25-year concessions to unidentified number of years.

In other words, the IPPs, especially the First Generation IPPs, will find ways to offset their net income. And we are talking about IPPs that have an average of 9 years left in their PPAs, and that would have recovered their investment -- using lo-interest loans from EPF etc -- during the first seven years of operation. (Read my earlier blog entries for the maths.)

I hope one day, the good old Dr Ani Arope, the former chairman and chief executive of TNB who was said to have resisted signing up the IPPs but was unceremoniously removed after a major multi-states blackout in the early 1990s, will come out and sing.

Ani Arope is the past that links to TNB's present;while Syed Mokhtar's Malakoff has Big Plan for you consumers in the future if TNB is broken up during the mid-term review of the 9th Malaysia Plan.
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Ani Arope last sang in 1996.