Speaking to reporters today, Ongkili said his explanation on the issue during his winding-up speech on Tuesday was consistent with Prime Minister Najib Razak’s statement, and not contrary to it.
“Pua’s statement was meant to confuse and smacked of inaccuracies when he alleged that the acquisitions had caused losses which led to the increase of the electricity tariff,” he said.
In a statement on Tuesday, Pua said Ongkili had confirmed his earlier assertion that 1MDB’s takeover of the IPPs had not benefited the people in terms of electricity tariffs.
Pua was referring to the answer he had received from the minister in the Dewan Rakyat to his question on why the electricity tariff had not been reduced since 1MDB’s purchase of the IPPs.
According to Pua, Ongkili’s statement that the tariff rate had been maintained as finalised in the Power Purchase Agreement (PPA) meant 1MDB’s involvement in the renegotiation of the lopsided PPAs had no effect at all.
On the contrary, said Ongkili, his statement was meant to point out that the renegotiation had been thoroughly successful and beneficial for the people.
“1MDB’s acquisition of Tanjong Energy Holdings Sdn Bhd (now known as Powertek Energy Sdn Bhd), Kuala Langat Power Plant (previously known as Genting Sanyen) and Jimah Power helped save millions.
“For example, a review of the first generation tariff with the Kuala Langat Power Plant led to the reduction of the PPA tariff,” he said.
Ongkili added that three years ago, PD Power had requested for an extension after the initial 21-year PPA ended.
The extension of the power plant’s operations was offered in an open tender, and one of 1MDB’s subsidiaries happened to win the tender.
Because of this, he said, the new tariff was 30% to 40% lower than the initial tariff before it was reopened for tender.
“This proves that 1MDB’s involvement is beneficial to the people. Pua alleged that I had mentioned the tariff cannot be changed, and he is right to a point.
“However, he did not mention that the tariff cannot be changed in the sense that it cannot be increased.
“But the tariffs can be decreased. All the charges can be reduced, but none of them can be increased to more than the initial agreed tariff rate.
“Yet, Pua did not say this. Why? Because he is trying to confuse the people,” he said.
Last month, 1MDB responded to Pua’s claims about the electricity tariff not reducing by saying that the DAP man did not know the difference between PPA tariffs and electricity tariffs for consumers.
1MDB said Pua had confused the PPA tariff with the electricity tariff, maintaining that it had indeed helped reduce the former.
“As Pua well knows, the PPA tariff is only one component of the electricity tariff, with other components being fuel costs, transmission and distribution costs, etc.
“It is a fact that 1MDB generated competition during PPA bidding for new power plants and renewal of PPA contracts for existing power plants.”
According to the fund, PPA tariffs for new and existing plants were reduced by between 1 and 2 sen per KW/H as a result of 1MDB’s participation.
“Based on an 85% capacity factor, a 1-sen tariff per KW/H reduction on a 2,000 MW power plant over 20 years can result in up to RM3 billion in cost savings over the life of a PPA, for one power plant.
“The savings are multiplied significantly across other PPAs. This in turn lowers the overall PPA tariff cost to Tenaga Nasional Bhd, which is the sole buyer under all PPAs, and contributes towards the electricity tariff.”
DAP: Minister’s reply on 1MDB power assets debunks Najib’s claim
http://www.freemalaysiatoday.com/category/nation/2015/04/22/rakyat-paying-higher-electricity-rates-to-bailout-1mdb/