Awer reminds Energy Commission of pledge

PETALING JAYA: The Association of Water and Energy Research Malaysia (Awer) has reminded the Energy Commission (ST) and the Ministry of Energy, Green Technology and Water (KeTTHA) of the need to keep to a pledge of a transparent and competitive bidding process to replace the five expiring second generation power purchase agreement (PPAs), following the uproar which led YTL Power International Bhd to decline an award through direct negotiations.
Awer said the ST had in a meeting in Sept 11, 2013 pledged that there will be no renegotiation for second generation PPAs but instead a transparent competitive bidding process will be implemented to replace the retiring capacities.
"There should not be any reason of of insufficient time to divert from transparent open bidding process," Awer's president Piarapakaran S. said in a statement yesterday.
The retiring plants which are running gas power plants that needs to replaced amounts to 2,682 MW of capacity. The respective PPAs are the 322MW Pahlawan Power Sdn Bhd that expires in August 2020, the 640MW GB3 Sdn Bhd (Dec 2022), the 720MW Panglima Power Sdn Bhd (Feb 2023), the 650MW Teknologi Tenaga Perlis Consortium Sdn Bhd (March 2024) and the 350MW Prai Power Sdn Bhd (June 2024).
Piarapakaran said the Track 4A issue showed a stronger voice from all stakeholders to ensure equitable and affordable cost from the power generation sector is passed through to electricity tariff.
"With the increase in natural gas price for electricity generation sector to reach market price by Jan 1 2016, transparent competitive bidding is the only way forward," it said.
"Track 4A is just one power plant; there are more to come and all of us need to monitor the bidding processes closely as once the PPA is signed, we will be stuck with the cost for more than two decades," he said, commenting on YTL Power's withdrawal from the consortium consisting it, Tenaga Nasional Bhd and SIPP Energy Sdn Bhd.
On Track 4A, Piarapakaran said there is still sufficient time to construct Track 4A via transparent competitive bidding process.
"Track 4A is a combined cycle power plant which takes about three years (32 months to 36 months) to complete. The EC must carry out transparent competitive bidding process now and the Notice to Proceed must be issued by June 15," he said.
Piarapakaran reiterated that the reduction in cost of planting up a power plant only can be achieved via transparent competitive bidding process.
The transparent competitive bidding process, he said, needs to identify the most efficient technology that has proven operating track record with the lowest levelised tariff.
"The most efficient technology will allow power generation plants to produce higher output of electricity with lower input of fuel. Fuel cost (41%) is the hihest component to electricity tariff followed by capaxcity charges (28%)," he added.
Piarapakaran said Awer will monitor all the competitive bidding processes closely to ensure the criteria set for the bidding process pushes the cost of the project lower which enables a lower levelised tariff.
He also urges all the members of Parliament to closely monitor these processes and Public Accounts Committee (PAC) of the Parliament should take a lead role in this.
Meanwhile, Maybank IB Bhd in a report yesterday noted that the withdrawal of YTL Power would mean that the regulator would likely tender out the project, but on an accelerated basis.
The ST however has not said if a new round of tenders will be called. It instead in a statement released late yesterday just said that it accepted YTL Power's decision to withdraw from the consortium which was awarded the project.