By Clara Chooi
The Malaysian Insider
Jun 15, 2011
Lim: The only losers are 27 million ordinary consumers who are not IPPs.
KUALA LUMPUR, June 15 — The Najib administration’s attempt to increase its 2011 budget by RM13 billion is proof of its failure to control spending even after slashing subsidies on daily essentials, DAP’s Lim Guan Eng said today.
The Penang Chief Minister blamed Barisan Nasional’s (BN) “bad governance” for the increasing cost of living in Malaysia, adding that the public was now experiencing “the worst of both worlds”.
“By reducing subsidies, there are inflationary pressure causing prices to rise and hurting the poor. And yet, cuts do not improve efficiency and competitiveness nor cut down budget expenditure as the IPPs (independent power producers) are still allowed to enjoy gas subsidies.
“The only losers are 27 million ordinary consumers who are not IPPs,” he said in a statement today.
Putrajaya tabled a RM13,186,713,000 supplementary supply bill in Parliament yesterday, seeking additional spending in the first half of this year. The amount is an 8 per cent addition to Budget 2011’s RM162,805,323,000, which was tabled last year.
Of the RM13 billion, the biggest amount is for the Treasury (RM6 billion). A total of RM1.5 billion goes to the Education Ministry while RM1 billion is for the Health Ministry.
Lim continued the expound on the opposition’s call on the the federal government to review its agreements with IPPs, which are said to enjoy annual subsidies of up to RM19 billion.
Despite widespread criticism, the government recently slashed subsidies for sugar and diesel for nine categories of commercial vehicles and increased electricity tariffs.
“The people are paying the penalty for BN’s failure to control spending when drastic subsidy cuts of sugar, electricity, natural gas and diesel have not brought about any improvements in our budget deficit,” Lim complained.
He added that the continued failure to cut IPP subsidies has only succeeded in increasing the public’s growing disenchantment with the Najib administration, which is said poised to face a general election very soon.
Petronas, said Lim, was forced to extend about RM131.3 billion in gas subsidies up to the end of 2010 and this only benefitted the IPPs.
The IPPs, he added, also benefit from a guaranteed buyer through its compulsory Power Purchase Agreement (PPA) signed by TNB.
“Normally TNB would not be raising electricity tariffs with such huge subsidies. But the RM5.4 billion subsidies enjoyed by TNB were offset as they are forced to purchase power they do not need at high prices that only profits IPPs,” Lim explained.
As a result, he said, Malaysia’s power reserve margin is the highest in the world at 52.6 per cent.
“Perhaps BN needs a strong reminder whether it is the IPPs or ordinary Malaysians that determine the direction and destiny of the country,” he said.