Malaysian Government may already have power to force renegotiation of YTL's and others' PPAs

The Malaysian Minister "for the time being charged with the responsibility for matters relating to the supply of electricity", may already have the powers to compel The Pencil of God, his YTL, and the other Independent Power Producers to renegotiate and value downwards their power purchase agreements with Tenaga Nasional.
The IPPs and Tenaga are all regulated by the Minister pursuant to the provisions of the ELECTRICITY SUPPLY ACT 1990.

The Act contains the following broad provisions:

4.

The(Energy) Commission shall carry out such functions and duties as
follows:

(c) to promote competition in the generation and supply of
electricity to, inter alia, ensure the optimum supply of
electricity at reasonable prices;

(d) to promote the interests of consumers of electricity supplied
by licensees in respect of—

(i) the prices to be charged and the other conditions
of electricity supply;

(ii) the continuity of electricity supply; and

(iii) the quality of the electricity supply services
provided;

(f) to secure that licensees are able to finance the carrying
on of the activities which they are authorized by their
licences to carry on;

(g) to promote and encourage the generation of electricity
with a view to the economic development of Malaysia;

(m) to carry on all such other activities as may appear to the
Commission requisite, advantageous or convenient for


Tenaga has complained for a long time that the PPAs it has with YTL and others are a financial burden.That burden is now to be passed on to consumers, in quantum never seen before. Tenaga's financial viability depends on this burden being passed-on, but there will be a limit to how much can be passed on. Eventually Tenaga's financial viability will be adversely affected, to a greater degree than it is now. Eventually, "the economic development of Malaysia" will also suffer as a consequence.Hence, the Commission, acting under the direction of the Minister, has sufficient reason to compel a downward revision in the value of the PPAs to the IPPs.


As a matter of fact, the Minister and the Commission ought to have intervened a long time ago pursuant to Section 4(f)of the Act:

to secure that licensees are able to finance the carrying
on of the activities which they are authorized by their
licences to carry on;

when it became evident that Tenaga was experiencing financial difficulties as a consequence of being tied to take-or-pay PPAs like the one granted YTL.

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