Gas subsidies to IPPs, unbelievable high…
Towards the end of the blog, you will find a joke that will make you angry, not laugh… Today in Starbiz, Petronas tabulated a table of figures showing gas subsidy, it is really interesting because this is the first time I have actually seen the real figure.
Petrol market price is RM 3.36/litre as of today, subsidy is 0.66/litre, and we are paying RM 2.70/litre.
Diesel market price is RM 3.82/litre as of today, subsidy is 1.24/litre, and industry is paying RM 2.58/litre.
Now come the interesting part that many do not aware of. NGV is selling RM 0.68/litre, but actually market price is RM 3.22/litre, and subsidy is 2.54/litre. So NGV market price is only 14 cents cheaper compare to petrol market price. NGV no doubt is heavily subsidised now and when ignorant MALAYSIANS start to flock to NGV, do you think it will continue to be cheap?
More interestingly, gas subsidy to power sector, or to IPP (Independent Power Producer) is RM 48.86/mmbtu, market price is RM 63.17/mmbtu. Compare to petrol in mmbtu, market price is RM 103.07/mmbtu and the old price of 1.92/litre resulted in 58.50/mmbtu. So the subsidy element RM 44.47/mmbtu. Comparing in mmbtu terms, it seems like not very big difference.
But lets compare in total gas subsidy, total subsidy to IPP is 8.1 billion, TNB 5.7 billion while to all non power sectors is 5.9 billion. Why do we need to subsidise this 1 sector, IPP so heavily until it surpasses total subsidy for the country on gas, NGV, petrol and diesel.
Why are we subsidising IPPs so heavily only for them to generate 40% power reserves. Why do we need 40% power reserves…to sell it to Thailand? Singapore?
TANJONG, GENTING SANYEN, MALAKOFF, YTL POWER, MMC are all IPPs. There also listed companies well liked by foreign investors because they are running an almost "risk-free" business. They have an agreement with government whereby their cost is locked (cost is the subsidised gas) and revenue is guaranteed because government is contracted to purchase the agreed amount of power from IPPs annually. The agreement was drafted in the 90’s under Dr. Mahathir’s regime. We find it so hard to keep subsidy that benefits the people, maintaining a gradual rise approach to the petrol price but we willing to pay total gas subsidy of RM 8.1 billion to IPPs.
This is really unbelievable, ridiculous. Whoever came out with the agreement, ought to be hang or shot, because I dont see how it will benefit the goverment and public, it is definitely a corruption.
