THE government should stand resolute on the implementation of the 30% windfall profit tax for independent power producers (IPPs). It should not be swayed by alarmist views that the windfall tax will have a negative impact on the bond markets.
An economist has debunked this and pointed out that the current lacklustre performance of bonds was being affected by any number of factors and not solely the windfall tax issue or inflation.
It should not be forgotten that the IPPs have managed to rake in super profits year after year since they came into operation in the 1990s.
This is because Tenaga Nasional Bhd (TNB) was forced to agree to the overly generous terms given to the IPPs in the contracts signed between them.
Last year, 13 IPPs made a profit of RM3.37bil. The IPPs have probably recovered their initial capital investments many times over.
Furthermore, since 1997, the IPPs benefited from RM27.6bil in gas subsidies from Petronas.
Petronas, TNB and the public have long been at the losing end because of the IPPs. Therefore, the Government must not exempt IPPs from the windfall profit tax.
S.M. MOHAMED IDRIS,
President,
Consumers Association of Penang.
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