Ministry explains why YTL Power has not signed PPA with TNB

PETALING JAYA: YTL Power Generation Sdn Bhd has not signed the power purchase agreement (PPA) with Tenaga Nasional Bhd (TNB) due to the conditions precedent (CP) set by the national utility company on its PPA, according to the Ministry of Energy, Green Technology and Water (KeTTHA).
“TNB is also challenging the direction issued by the Energy Commission (EC) to extend the PPA. Hence, TNB had submitted the direction for judicial review,” KeTTHA said in a statement yesterday.
To recap, the government via the EC conducted a competitive bidding exercise last year to procure additional power supply on a short-term basis by extending the PPA of the first generation independent power products (IPP).
Three IPPs, namely Port Dickson Power Bhd (PD Power), Kuala Langat Power Plant Sdn Bhd and YTL Power, fulfilled the conditions set by the EC and were selected.
PD Power and Kuala Langat Power have since signed the PPAs with TNB.
On Monday, TNB said it has applied for leave to commence judicial review proceedings against the EC and the Energy, Green Technology and Water Minister at the High Court.
It said the application is in relation to a direction dated April 7, 2016 issued by EC to TNB which compels TNB, among others, to remove the incorporation of CP required by TNB in the proposed new PPA between TNB and YTL Power. The direction issued by the EC follows a direction issued by the minister to the EC on April 1, 2016.
The PPA is for TNB to buy electricity generated by YTL Power’s 800MW power plant in Paka.
TNB seeks, among others, to quash the directions issued by the EC and the minister and declarations that both directions are ultra vires the Act read with the Energy Commission Act 2001.
Aside from the legal and management costs, the judicial review proceedings will not have any material financial and operational impacts on TNB.
However, under Section 50E of the Electricity Supply Act 1990, failure by TNB to comply with the direction is an offence and, if convicted, TNB will be liable to a fine of not more than RM200,000 or imprisonment of not more than two years, or both.