'Of course, the rakyat do not have contracts like those of the IPPs but we do have a contract with the gov't that expires every five years.'

RM19b in subsidies for IPPs to be reduced

Noname: The IPPs (independent power producers) should not have any subsidies. Almost all of them generate power at a much higher cost than TNB's own power stations. Why? Because they know that the subsidies ensure that they make obscene profits.

They also use old designs that cost less to construct but consume more fuel to generate power. Without the subsidies, IPPs will be forced to be more efficient, using less fossil fuel and polluting the air less.

Terus: The IPPs have contracts but some of them will be expiring soon. That's good news. Wait, if the contracts are so lopsided, can the government not nationalise these companies?

At the end of the day, the rakyat should benefit, not those big boys. Of course, the rakyat do not have contracts like those of the IPPs but we do have a contract with the government that expires every five years or sooner.

Sentinel: Why just reduce - it should be completely abolished. After all, the government is going to increase the electricity tariffs for the consumers, so what savings will the subsidies reduction mean to us consumers.

The government should also look at the purchases of steam coal by TNB. Why is TNB paying prices benchmarked against Newcastle Coal Index. Why not buy coal from Kalimantan, which is of the same grade and much cheaper, and cheaper to freight over? Why buy more expensive coal from Australia and pay so much more in freight charges?

Cala: IPPs are products of the concept of privatisation originated from the West as they believe in the relative efficiency of private enterprises over state enterprises (Tan, 2008). Please read ‘Privatization in Malaysia: Regulation, rent seeking and policy failure'. Jeff Tan conducted case studies of such programme (Malaysia's national sewerage system, Kuala Lumpur light rail transit, Malaysia Airlines and Proton).

One of the drawbacks that explained the failures of privatisation programme in Malaysia is due to weaknesses in ex-ante contract arrangement (due to state and the recipients of privatisation sitting on the same side of the fence), and weaknesses in the post-ante enforcement of the contract (due to state ignorance, lack of commitment to do a job well, lack of vision, and lack of an interest to meet larger societal goals).

For clue, look at the shareholders of IPPs. As a result, recipients of privatisation are in a position to ‘rent capture the situation.

One can draw parallel to see how the state manage/enforce post-ante contracts signed between the state (the Umno-led BN regime) and IPPs by recalling the findings in Lingam- RCI. Remember Lingam was caught allegedly writing judgments for some judges when he was only a defence counsel?

In the same manner, to expect minister Idris Jala to negotiate with IPPs on more equitable term of contracts is ludicrous until we have a two-party system. As the saying goes, we are what we are because we have allowed a monster to become such a size in the last 53 years that to tame it is impossible in the short run.

Anonymous_5fb: Why should the government gives IPPs the subsidies in the first place? From what I have read, TNB is bound to buy all the electricity produced by the IPPs at a fixed tariff even if TNB doesn't need the electricity. In the end, we the rakyat are the ones who suffer. Is this a fair deal?

Habib RAK: I hope we get an honest explanation. There are many of us who are ex-Esso, ex-TNB, ex-Petronas and ex-YTL, who know the real story behind the power contracts. It was a one-sided deal from the beginning with the primary purpose of milking the government.

Kgen: RM19 billion in subsidies for the IPP fat cats and the BN government moans about the RM10 billion in petrol and diesel subsidies to the rakyat. Why was such a lopsided contract signed in the first place? A small IPP like YTL makes half the profit of TNB.

Removing subsidies for the IPPs is far harder for this government to do then removing subsidies for the rakyat. The IPPs only have to moan a little and the government will cave in. Maybe they will remove the subsidies with their right hand and give them back with their left hand. This was what happened to the toll operators.

Ericlcc: The government is too weak to negotiate with the IPPs for a reduction of subsidies in the lopsided contracts. After all, many of these IPPs are cronies of the ruling party. Like toll operators, they will probably demand new concessions and compensation for giving up some of their easy windfall.

For a country like Malaysia, we have a very high energy reserve of more than 40 percent. Why is the government still paying the IPPs when we have such a high energy reserve?

Swipenter: Haven't we woke up yet? Under the guise of privatisation, the taxes collected from the rakyat is used to subsidise the cronies owning and running the IPPs, highways, waterways, airports, seaports, etc.

Where on earth can we find such ‘beauties' such as guaranteed profits/margins in privatisation of essential services but in Malaysia, hatched and overseen by none other than Dr Mahathir Mohamad.

What we have here is essentially all the little men and women of Malaysia subsidising the cronies to become mega-rich. Any wonder why our income disparity is one of the worst in the region?

M'sia1st: Finally the government starts to listen to what Pakatan Rakyat and Opposition Leader Anwar Ibrahim has been shouting for years - cut off subsidies to IPPs.

So great savings actually can be obtained from them, but make sure the government uses it for the benefit of the rakyat and not otherwise. Listen more to the rakyat and you may live longer as the government.

Norzehan Saad: Anwar mentioned about reducing the subsidies to the IPPs in 2008 during live debate with then information minister Ahmad Shabery Cheek. Also Pakatan said it will fund part of the implementation of its Buku Jingga (Orange Book) plans by abolishing IPP subsidies.

As I recalled, the government said the proposals were unrealistic and would bankrupt the nation. I see the BN is stealing ideas from Buku Jingga and call them their own. What else the government is copying from the Buku Jingga?

Hmm... the recently abolished toll in the Metramac highway and rewards for teachers (though not exactly the same reward as promised by Pakatan).

Quigonbond: When I'll see the actual reductions, I'll believe them.

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