Awer: Revoke direct-award power deals first before reforming industry

KUALA LUMPUR: Even as Minister of Energy, Science, Technology, Environment and Climate Change Yeo Bee Yin said her ministry plans to revive MyPower Corp for another round of power industry reform, Association of Water and Energy Research Malaysia (Awer) president S. Piarapakaran urged that previous direct awards of projects be revoked first.
Speaking to SunBiz, Piarapakaran said the government should settle baggage from Malaysia Electricity Supply Industry (MESI 1.0) in terms of shelving all direct negotiation contracts and questionable contract awards before initiating MESI 2.0. He also called on the government to name the independent power producers whose contracts were cancelled, in accordance with the previous announcement.
"The industry is already properly structured. It is just that the transparency part is lacking and when they award these projects, many of them go through direct negotiations.
"You cannot jump a few steps ahead by not solving the existing problems. All the direct negotiations that were given, you have not put a balancing factor into the tariffs," Piarapakaran said.
He opined that Malaysia does not need another MESI, but instead needs to firm up the current model to promote transparency in terms of cost structure and improve efficiency as well as ensuring the right people are helming MyPower.
"The current model is quite a win-win model. The only thing lacking in the current model is transparency in terms of tariff setting and the regulatory mechanisms," he said, adding that tariffs should not be politicised, but government involvement in terms of regulation is needed.
Yeo, speaking at a press conference after the opening ceremony of the Conference of the Electric Power Supply Industry 2018 (Cepsi 2018) today, said her ministry will conduct a six- to eight-month study to firm up the dynamics of the revival of MyPower Corp, which will be manned by between 12 and 20 people. However, she did not elaborate on the leadership for MyPower.
Yeo said MyPower will be entrusted with increasing the industry's efficiency, future-proof industry structure regulations and key processes, as well as empowering customers by democratising and decentralising the electricity supply industry for three years.
MyPower drove reforms under MESI 1.0, under the helm of former Energy Commission chairman Datuk Abdul Razak Majid.
After the reform, Yeo said, the domestic electricity industry is expected to be efficient, transparent, market-based, competitive, sustainable and be more prepared to move towards renewable energy.
She said the electricity tariff is unlikely to be increased after MESI 2.0.
Currently, fuel prices are a major determinant of electricity tariffs, accounting for two-thirds of the pricing mechanism.
MESI 2.0 is likely to see greater utilisation of market-based competition across the value chain, reduced government intervention, increased transparency, adoption of more cost reflective and time-based tariffs and targeted subsidies for those in need.
"We are not saying the government will not be intervening. If we have a competitive market based structure it will be the more cost-effective tariff for the people. We need to depoliticise the industry which cannot be done without reform because there is room for improvement in our market structure and operation," she said.
On another note, Yeo said the government will announce a new electricity subsidy scheme for the lower income group comprising the 179,000 people registered under e-kasih in the next few weeks.