Not too long ago Francis Yeoh said he does not depend on the Malaysian government and does not need the government to make money. He can make money overseas, which is where his money really comes from, said Francis.
Actually that is not entirely true. Since 1993, YTL Power Generation Sdn Bhd alone is estimated to have earned around RM15-20 billion from selling electricity to TNB. And that is only from one of YTL’s businesses, mind you.
The power plants were a cash cow cum goose that laid the golden eggs for YTL, and diamond-studded eggs on top of that. But that is now all gone (SEE THE BERNAMA NEWS ITEM BELOW).
The lovely thing about this entire arrangement is that YTL did not have to do any work or come out with any money. Siemens designed, built, financed and maintained-operated the entire project. YTL just received a cheque from TNB, which started at RM600 million a year in the beginning and gradually increased as they went along.
YTL, in turn, bought gas cheap from Petronas, considered below market price, at a fixed price that remained static the entire period of the contract. It was almost like Petronas was donating the gas to YTL.
Both TNB and Petronas were extremely unhappy with the arrangement but could do nothing about it because the Prime Minister at that time personally approved this project.
In fact, the late Ani Arope, who died in December last year, was the Executive Chairman of TNB at that time and he was bitterly opposed to this project. He refused to sign the contract and when put under pressure he decided to resign rather than buckle.
This was what The Star reported on 24 December 2014:
Ani, who passed away on Saturday, had openly opposed the creation of the independent power producers (IPPs).
He stood his ground in 1995 rather than signing off on generous power purchase agreements (PPAs) with IPPs. Instead, he stirred the market by quitting rather than signing the lopsided agreements.
Under the PPAs, TNB has to pay for the extra power upfront, regardless of whether it is used or not. This means that TNB is paying substantially for power it doesn’t use.
Ani refused to sign the lopsided agreements and subsequently resigned. The first-generation IPPs (YTL Power), who were said to have got “sweetheart deals” at the expense of TNB, which had to buy up the excess capacity from them, are no more.
In an interview with StarBizWeek in June 2006, Ani disclosed that there were no negotiations with the IPPs when asked how the process of negotiations was conducted.
“There was no negotiation. Absolutely none. Instead of talking directly with the IPPs, TNB was sitting down with the Economic Planning Unit (EPU). And we were harassed, humiliated and talked down every time we went there. After that, my team was disappointed. The EPU just gave us the terms and asked us to agree. I said no way I would,” he was quoted as saying.
When asked on the pricing and terms of contracts, he said it was fixed. “(They said) this is the price, this is the capacity charge and this is the number of years. They said you just take it and I refused to sign the contracts. And then, I was put out to pasture.”
Ani said he disagreed with the terms because “it was grossly unfair”.
So there you have it, straight from the horse’s mouth.
YTL was not running a power plant. YTL had practically been printing money for the last 21 years. And instead of extending the contract and allowing YTL to continue printing money for another 25 years or so, where they would earn an estimated RM25-30 billion, Prime Minister Najib Tun Razak decides to kill the cash cow cum goose that lays the golden egg.
How do you expect Tun Dr Mahathir Mohamad to go easy on Najib when he does things like this? Definitely Dr Mahathir would want Najib kicked out via a vote of no confidence later this month. Is Najib brave or does he have a death-wish?
(Bernama) – The 21-year power purchase agreement (PPA) with YTL Power Generation Sdn Bhd has expired, said Tenaga Nasional Bhd (TNB).
In a statement today, TNB said following the expiry of the agreement, which was signed on March 31, 1993, YTL Power would no longer export power to its grid from October 1, 2015.
“Concurrently, a leasing agreement which YTL signed to lease the land in Paka, Terengganu and Pasir Gudang, Johor to build its power stations was also affected,” it said.
TNB said the agreement it signed with the independent power producer was the only PPA that was based on a take-or-pay mechanism for a period of 21 years.
It said the total capacity of the power station in Paka was 780 megawatt (MW), consisting of two blocks of 390MW combined-cycle gas fired generation facility.