Tenaga's power plan

Kuala Lumpur: Tenaga Nasional Bhd is proposing that first generation power contracts are allowed to expire and an open bidding process be used to replace the lost capacity.


"To me, the PPA (power purchase agreement) renegotiations did not bring any results. It is probably time for the parties to decide what to do," TNB chief executive officer Datuk Seri Che Khalib Mohamad Noh told Business Times in an interview recently.

Apart from the failed two rounds of talks, the scarcity of gas is also a factor.

If gas continues to be scarce, it will be better for the country to have new plants that are more efficient and can last another 25 years. New plants that are more efficient will be able to produce more power using the same amount of gas.

Building new gas-fired plants will also help the country reduce its carbon footprint, he explained.

Because gas is becoming more scarce, we better think seriously about this," Che Khalib said.

TNB's proposal means that independent power producers with contracts that will start expiring in stages from end-2015 will bid to supply new capacity from 2016 onwards.

It also means that IPPs must be told sometime in 2012 or 2013 if their PPAs won't be renewed. This will give them time to bid and build new plants.

There are five first-generation PPAs signed in 1993 that are binding for 21 years.

The IPPs are YTL Power Generation Sdn Bhd, Genting Sanyen Power Sdn Bhd, Segari Energy Ventures Sdn Bhd, Powertek Bhd and Port Dickson Power Sdn Bhd.

These IPPs have a collective generation capacity of around 4,100MW and the PPAs would expire in stages from end-2015.

It was reported that a new government unit called MyPower Corp will review PPAs between TNB and IPPs and make recommendations to three ministries, said Energy, Green Technology and Water Ministry deputy secretary-general Badaruddin Mahyuddin.

MyPower is headed by Datuk Abdul Razak Majid, formerly TNB's senior vice-president of corporate affairs.

"Part of its (MyPower) task is to review and discuss the contents of the PPAs and come up with suggestions for both TNB and IPPs. Before submitting these recommendations to the three ministries KeTTHA, Prime Minister's Office and Finance Ministry, the unit will jointly discuss them with the Energy Commission," Badaruddin reportedly said.

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