KUALA LUMPUR — YTL Power International Bhd will have to pay the market rate for land lease of two power plants, based in Terengganu and Johor, before the renewal of its power purchase agreement (PPA) with Tenaga Nasional Bhd (TNB).
The land lease is the core reason for the dispute that erupted between TNB and YTL, which revolves around a small amount YTL is said to have paid for the land lease in Paka, Terengganu and Pasir Gudang, Johor under the old PPA.
The industrial lease rate for the Pasir Gudang area was three to five times more than what YTL Power had paid under the previous PPA.
The exact price of land leased to YTL Power is not disclosed. The dispute has prompted the national utility company to file for a judicial review on July 4, challenging the direction issued by the Energy Commission (EC) to sign a new PPA with YTL.
TNB said the expiry of a 21-year power purchase agreement last year meant YTL Power Generation Sdn Bhd would no longer export power to its grid from Oct 1, 2015.
However, in the same month (October), the government announced an extension for the Paka power concession from March to Dec 2018. YTL Power is the only independent power producer (IPP) to have a power-generating plant on TNB land.
Any termination of the PPA will impact the Paka and Pasir Gudang power stations.
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.
The capacity of the power station in Pasir Gudang was 390MW, consisting of one block of combined cycle gas-fired generating facility, it said.
The gas-fired combined cycle power plants in Paka and Pasir Gudang has combined generation capacity of 1,212 megawatts.
In 2014, all four workers’ unions of TNB came together in a rare show of unity to urge the government-owned entity to severe all ties with YTL Corp.
They alleged that YTL muscled in and profited handsomely from a nationally important power sector. They wanted TNB not to renew YTL’s power purchase agreement when it was to expire last year.
They also want TNB to stop working with YTL Power on Track 4A, a new proposal for a power plant in Pasir Gudang, Johor, which was recently awarded by the EC.
It was the first time the TNB Junior Officers Union had brought up such a protest in 67 years.