Originally published in Malaysiakini: http://www.malaysiakini.com/letters/166289
Non-profit think tank Research for Social Advancement (REFSA) notes the recent debate between the Barisan Nasional government and the Opposition about the substantial gas subsidies offered to the power sector and the viability of restructuring the power purchase agreements (PPAs) with the independent power producers (IPPs).
On one hand, DAP MP Tony Pua charges that the IPPs make “astronomical returns at the expense of the people”. On the other, MCA president Chua Soi Lek reportedly said that the government is unable to restructure the PPAs.
REFSA believes that the best solution to this debate is to declassify the PPAs and open them to public scrutiny. Open access will enable interested members of the public to make their own enquiries and analysis, and contribute intelligently to the resolution of this issue.
We would point out that not all the PPAs were secret in the first place. The IPPs required heavy investment and intensive borrowings. To facilitate financing, ratings agencies and bankers had access to the PPAs.
Indeed, publicly available reports by the ratings agencies often allude to terms contained within the PPAs.
Also, in compliance with the regulatory requirements of Bursa Malaysia, PPAs were made available for shareholder scrutiny when IPPs were acquired by listed companies. Two examples that come to mind were when Tanjong Pic acquired Powertek Berhad and Malakoff Berhad acquired the Tanjong Bin power plant.
The PPAs were made a vailable for inspection by shareholders of Tanjong and Malakoff. Indeed, REFSA’s executive director Teh Chi-Chang scrutinised the Powertek PPAs when they were available for inspection.
PPAs are merely commercial contracts for the provision of power generation services, similar to the toll concessions which were commercial contracts for the provision of road infrastructure.
The declassification of the toll concessions resulted in a positive result for Malaysians – two toll rate hikes on PLUS have been deferred and it appears future hikes will be much lower than initially proposed.
Given the positive outcome from the declassification of the toll concessions, REFSA calls upon the government to declassify the power purchase agreements. This would allow all Malaysians to have the pertinent facts and figures on hand and facilitate reasoned, constructive debate.