Power reserve margin to hit 46% if no IPP projects axed, says energy minister

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KUALA LUMPUR (Aug 6): Malaysia's electricity reserve margin will hit 46% if Putrajaya does not proceed with the planned cancellation of certain new independent power producer (IPP) projects, Minister of Energy, Technology, Science, Climate Change and Environment Yeo Bee Yin said.

The total planned cancellation involves more than four new IPP projects, but will be less than the eight that the prime minister suggested be reviewed, Yeo told reporters at Parliament lobby today. These IPP projects were all awarded via direct negotiations.

Yeo also urged those already in the power producing industry to remain calm, as she stressed that the cancellation only involves new IPP projects, particularly those awarded through direct negotiation.

"Every award done through open tender should not be worried about this. Those already in operation should not be worried, only new IPP [projects]. What the market needs to know that when they invest in the future, they should invest only in companies that are involved in open tender," she said.

"In future, any company that wants to be involved in the power sector should only go for open tender because that would be the way it is from now on. Because usually in open tender, the price is competitive.

"The direction is very clear, only the new IPP [projects], because our reserve margin will hit 46% if we don't cancel some of them, and they don't give competitive price," she added.

Nonetheless, Yeo kept mum on the names of the IPP projects she is about to cancel, merely saying that the ministry will make the announcement at a "suitable" time, which she said is "very soon".

"But not this week, because I am going to announce it along with other things," she said.