Termination of four IPP projects could save RM1.26bil in electricity tariffs, says Minister

KUALA LUMPUR: The government will potentially save RM1.26bil in electricity tariffs following the cancellation of four independent power producers (IPP) projects in July, says Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin (pic).

The four IPP projects, she said, are Malakoff Corporation Bhd and Tenaga Nasional Bhd's (TNB) 700 MW Gas Power Plant in Kapar, Selangor; Aman Majestic Sdn Bhd and TNB Gas Power Plant 1,400 MW Gas Power Plant in Paka, Terengganu; Sabah Development Energy Sdn Bhd and SM Hydro Energy Sdn Bhd 300 MW Gas Power Plant in Sandakan Sabah; and Edra Power Holdings Sdn Bhd 400 MW solar Power project.

"If we had gone ahead with the projects if would have increased our capacity margin above what is required.

"This would then increase our capacity payments which would result in higher electricity bills in return," she said when answering a question raised by Wong Kah Woh (PH-Ipoh Timur) during Minister's Question Time in Parliament Thursday (Oct 25).

Yeo said that the Pakatan Harapan government would not suffer financial consequences due to the termination of the four projects.

"The cancellation of the projects are not expected to have negative financial or legal impact to the government as they had breached the terms and conditions in the offer letter," she said.

Yeo noted that the projects were awarded through direct negotiations, a practice which has been done away with for future projects.

“The government is committed to ensuring that future projects will be conducted through open tender whether for fossil fuel or renewable energy projects,” she said.

She also assured lawmakers that the termination of the projects would not affect the nation's electricity supply.

She said the nation’s electricity reserve margin is still at an optimum level of 32%.

Yeo had, on July 13, announced that four of the eight IPP contracts that were “hastily awarded” under the previous administration have been scrapped, while four others are being reviewed.