Media statement by Dr. Hiew King Cheu in Kota Kinabalu on Tuesday, 12^th July 2011:

IPP profit guaranteed?

Sabahan are very upset about the 15% rate increase on their electricity bills based on the announcement made recently and jointly by the Sabah Minister Industrial Development Raymond Tan Suh Kiat and the Federal Minister of Energy Peter Chin Fah Kui in Kota Kinabalu. Raymond Tan said this is not only the decision made by the Federal Ministry but also a joint decision made by the Sabah Cabinet. This will take effect from the 15th of July, 2011.

The decision to inflate the rate on electricity supply is said as a move to cut the subsidy by a huge sum and will help the government to save extra money. This means the general consumer will have to pay more from their pocket in order to let the government to save more money. This is the typical "People First" policy of the BN. The BN government actually squeezed more money from the people. Why can't the government continue to help the Sabahan to give more subsidies on their electricity consumption?

I received public tip-off on a particular IPP (Independent Power Producer) power plant whereby in the agreement it stated that if the daily consumption by SESB is less than RM3 million, the SESB will have to compensate certain amount of money to the IPP. If this is true that means the agreement is loop-sided and purposely made to benefit the IPP only. May be this is the partial reason that we have a 15% rate increase. This 15% increase will enable the SESB to help to top up the difference to bring the sum on the consumption to RM3 million per day, in order not to pay compensation. It is money from the consumers' pocket.

This calls for a clarification and explanation from SESB, the Federal Minister of Energy, and the Sabah Minister of Industrial Development. The tip off source also mention about the IPP agreement is for tenure of 25 years. How can we execute a contract where by the IPP is guarantee a minimum electricity consumption by the state of RM3 million per day and if it doesn't reach that amount the government will have to top up? This must be a lucrative business and profit guaranteed.

Chin Fah Kui said in spite of the huge allocation of RM2.872 billion and the subsidy of RM2.663 billion to SESB over the past 15 years, they are still losing RM0.062 per kilowatt hour.

Therefore if the IPP's minimum receipt per day is guaranteed by the government that means we shall have to pay higher electricity tariff to close the short fall. Now the SESB had openly appealed to the general public to save on electricity usage, and that means the short fall will be even greater. For the IPP definitely they have no problem, but the government will have to pay through their nose. The end sufferers are the consumers.

It is hard to believe that we are still depending heavily on the IPP to supply the power. Is it because these IPPs are the cronies? The management on our electricity supply had been in a very poor stage over the past 50 years, why can't the government have a solution to overcome this once for all? Obviously from the history and records, the government had failed totally. We need some answer as what the government has in mind.

* Dr Hiew King Cheu, MP for Kota Kinabalu