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Fuel and power hikes: Cut down on wastages, leakages and corruption instead of resorting to price increase alone

Media Statement
by Ronnie Liu

(Petaling Jaya, Monday): To certain extent, our brothers and sisters in Sarawak have sent a message” loud and clear” to the Barisan Nasional Government in the recent Sarawak State Elections, that we Malaysians disagree with the fuel hikes that caused a spiral effect on prices of goods and services in the country.  In fact, inflation has gone up to 4.6% by April 2006.

We must thank our brothers and sisters in Sarawak for sending such a strong message on behalf of all Malaysians.

And here comes the 12% power rates hike.

It appears to all that the BN Government has failed to learn any lesson from the recent state elections, probably because they continue to rule with a huge (62 Vs 9 seats) majority. In that sense, the Sarawak voters in general may have shaken the Taib Administration a little, but they have missed a golden opportunity to create a “tsunami” to drown the state government, thus forcing the Federal Government to rethink about their policies.

We have many reasons not to support the exorbitant fuel hikes. Likewise, we have no reasons to agree with the sharp increase of electricity tariffs.

The talk that the low income families will not be affected is nothing but “bullshit”.

The power rate hike will inevitably push up prices of all goods and services and inflation. There is no way that the ordinary people could escape the impact.

The fuel and power hikes will eventually dampen the domestic economic growth and slow down the pace of all business activities, causing many Malaysians to lose their jobs.

Both the fuel and power hikes could be avoided. The Government should have used the huge profits of Petronas to lessen the burdens of all Malaysians, instead of only allowing the GLCs and their cronies to utilize the coffers for bailouts.

Petronas makes an after-tax profit of RM35.5 billion in 2004/05. The Government should have taken RM4.4 billion and RM 1.5 billion respectively from Petronas to avoid the fuel and power hikes, thus giving all Malaysians a breathing space in this time of economic difficulty.

On top of that, the Government must start to reform itself. These include cutting down on wastages and leakages, and reduce corruption at all levels.

Just by cutting down on wastages, leakages and corruption, the Government could save billions of ringgit for the development of human capital and infrastructure.

For instance, if the Government cares to plug the leakages involving the IPPs and start reducing the current excess capacity from 40% to a reasonable level, TNB would be able to save billions of ringgit.

It was reported that TNB has a debt of more than RM30 billion. It was also reported that the IPPs were allowed to take advantage of TNB with the “take-or-pay” tariff regime, which far exceeds the cost if TNB were to generate its own power. As a result, half the expenditure of TNB was said to have gone to IPPs.

(Under the PPAs, the IPPs charge TNB based on the capacity, no matter if the electricity is actually generated. Apart from that, the IPPs bill TNB on another category stated as 'energy charge' for actual electricity supplied.

In totality, the IPPs bill TNB around the clock, but 40% of billable electricity becomes wasted excess, everyday. And this situation has no sign of being reversed anytime soon.)


SOURCE: The IPP Investment Experience in Malaysia by Jeff Rector, Stanford University, Page 27

Malaysians should not be paying for the blunders committed by the past and present BN Government leaders.

The Abdullah Administration should immediately heed the call made by the people it represents by reviewing its decision on fuel and power hikes.

Allowing prices to increase is no magic. It certainly has its negative impact and grave consequences. The Prime Minister and the Cabinet must not resort to increase of prices alone and do nothing about cutting down on wastages, leakages and corruption.

That’s not the way to run a country.


* Ronnie Liu Tian Khiew, DAP NGO bureau chief

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