We call on the Malaysian Government to make greater efforts to implement the 5% target for total electricity production from renewable energy (RE) by 2005. RE is the fifth fuel source under the Eighth Malaysia Plan (2001-2005). The others are oil, gas, hydro and coal.

The crude oil price reaching US$70 per barrel is an important factor to focus attention on RE projects.

The world crude oil price of over US$60 affects the economy. It aggravates inflation. Recently, the Malaysian Government has announced that it does not intend to let petrol and diesel price go up further until the end of this year and that there will not be increase in the road toll collection rate until the end of 2006. The people are worried about the price hike of goods.

The main electricity provider in the country, Tenaga Nasional Berhad (TNB), is facing problems like outage, work practices, delay in processing application, dealing with repair and coordination and efficiency in distribution. It has not paid enough attention on RE.

The peak demand for electricy per annum is over 1,300 megawatts and the total energy generation capacity is about 1,900 MW. But, over 95% of energy generation is from fossil fuel such as oil, gas and coal. The Third Outline Perspective Plan (OPP3) from 2001-2010 says that Malaysia may become an oil importer by 2008. This depends on finding new oil fields and oil consumption.

In 2001, Malaysia introduced the Small Renewable Energy Project (SREP), using energy from wood based residues, palm oil biomass, mill residues and hydropower. Out of 66 applications approved, only two have been successfully connected to the grid with a capacity of 12MW.

Clearly, the Government has to do more on RE. The renewed interest in converting palm oil to diesel is reasonable. The Government has to review its incentives for RE so that investors will be attracted to SREP that involves high investment and high risk. Such incentives as income tax exemption of 70% on statuary income for 5 years may not be adequate.