TNB, EPU officials meet to discuss power deals

Tenaga Nasional Bhd (TNB), which is trying to hammer out a more palatable deal on power purchase agreements (PPAs), met up with officials from the Economic Planning Unit (EPU) last Friday.

In the first of a series of meetings between the Government and the power sector, only TNB was invited to outline what it had earlier presented to the independent power producers (IPPs).

Prior to the announcement of the windfall tax in early June, IPPs were called up on an individual basis to discuss TNB's expectations in the PPA renegotiations.

StarBiz learnt that IPPs had been given until end of next month to revert with their proposals.

“It is too early to say anything but the IPPs' attitude seems to be improving,'' said an industry observer.

TNB is believed to have come up with a “recipe'' that is easier to agree to.

The IPPs have always maintained that they want to co-operate with the Government, more so in current times of rising costs.

“The industry is cognizant of the fact that our country is facing one of the toughest economic challenges due to the spiralling cost of fuel.

“Our members, on their part, will be happy to discuss ways with the Government in which the industry can further support the local economy,'' The Association of IPPs (Penjanabebas) had said in a statement.

In the interests of consumers, can a win-win situation emerge?

The true test of renegotiation skills now lies with the EPU, which is headed by former Maybank president and CEO Tan Sri Amirsham Abdul Aziz, who has negotiated very large deals for Maybank and is well-known for calling “a spade a spade''.

IPPs that are run more efficiently may now have to consider passing back some of the cost savings to TNB, which is increasingly saddled with rising costs of raw materials.

In pressing times, not everything can be viewed as cast in stone, as in the case of contracts signed many years ago. Citizens from all walks of life may come forward to lend a helping hand.

Among the older IPPs, Genting Sanyen was said to have one of the less favourable deals then and yet, this time round, it is more amenable to requests for help. Malakoff, which has a sizeable number of IPPs in Malaysia, is also said to be coming round.

A word of caution is that the entire chain has to be looked after, and this includes the banks and bondholders which had early last week got together to submit a memorandum to the Government to express their concern.

One thing for sure is that profits are going to be scaled down and payments to banks may have to be restructured.

Last Thursday, Second Finance Minister Tan Sri Nor Mohamed Yakcop said any IPP that had successfully renegotiated its PPA would be exempted from the windfall profit levy from the date the terms of the renegotiated PPA came into force.

Nor Mohamed also said a committee comprising the EPU, Finance Ministry, and Energy, Water and Communications Ministry would be set up to oversee and arbitrate the PPA renegotiations between the IPPs and TNB.

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