Friday, July 25, 2008

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IPPs exempted from paying windfall profit levy with new agreement

KUALA LUMPUR: Independent power producers (IPPs) which successfully renegotiate their Power Purchase Agreements (PPAs) will be exempted from paying the windfall profit levy.

The exemption starts from the date the terms of the new agreement comes into force.

Second Finance Minister Tan Sri Nor Mohamed Yakcop said in a statement that the new move was to encourage progress in the negotiations.

A committee comprising the Economic Planning Unit of the Prime Minister’s Department, Finance Ministry and the Energy, Water and Communications Ministry would be set up to oversee and arbitrate the negotiations between the IPPs and Tenaga Nasional Berhad.

“The Government is confident that renegotiations on PPAs will be successfully concluded within a year, taking into account the interests of all stakeholders, including IPP bondholders,” Nor Mohamed said.

On June 4, the Government said that a windfall tax of 30% would be imposed on IPPs from July 1, following the hike in fuel prices and electricity tariffs.

Nor Mohamed said that in the context of electricity, the Government’s principle objective was to ensure a sustainable power industry, whereby people and business consumers would continue to be assured of electricity supply at competitive rates.

“Particularly with the current environment of high fuel prices, the Government is of the opinion that all stakeholders, including IPPs, must contribute towards the rising cost of electricity on a more equitable basis,” he added.

Nor Mohamed said the Government had earlier in 2006 initiated renegotiations of existing PPAs which was not unusual in the global context, given that PPAs had been renegotiated in the United States, Northern Ireland, India, the Philippines and Indonesia.

“However, our renegotiations had not been successful.

“In the absence of progress, the Windfall Profit Levy Act was applied to IPPs as an expedient mechanism to effect the IPPs' contribution towards the higher cost of fuel,” he added.


*Bukan ini plan Anwar masa debate ari tu ke? Yang goverment dok demonized dia pastu boleh pulak try nak ikut plan dia. Memang dasar kerajaan hipokrit. Sebelum debate tu rasanya takde pun org-org gov sebut pasal nak renegotiate dgn IPP ke apa ke. Pas ni kalau langkah ni berjaya mesti Pak Lah yang take credit.

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