Delayed actions that has and will cause Malaysia losing billions of RM in energy costs

Lately Malaysians are often being emphasized on the effect of subsidies in the energy sector to the national economy in the long run . As the majority of Malaysians are educated people either at school or the university level , concerns about dependence on subsidies is understandable , but the question is , are all of the options and measures that could be implemented have been considered before action is undertaken  to reduce energy subsidies for the benefit of our economy ?

To improve leakage and government weaknesses in administrative processes and operations is might be more difficult, complicated and take longer time but to overcome the  waste of money wasted from inefficient use of energy resources is something more practical to be implemented  within the time planned.

Every unit of energy saved would be a unit RM disposable income and can be used  for various other purposes for the people’s benefits. In addition, each unit of energy saved will also save a unit RM amount of subsidy borne by the government or in other words , more savings ,  less spending by the government to subsidize fuel.

I would like to share with all Malaysians on something that really making me struggle to understand and to get answers that will stop my sleepless nights when thinking about it, the delay in the introduction the National Energy Efficiency Master Plan.

The master plan is suppose to be a blueprint for a long term initiatives to improve energy performance at the demand side which covers energy users such as industrial and building facilities and also domestic consumers.

 In the reply to a question in Parliament in June 2013 on the status of the master plan, the followings are the summary of answers provided by the Ministry of Energy, Green Technology and Water:

• National energy efficiency policies formulated by the National Energy Efficiency Action Plan of the National Energy Efficiency Master Plan (NEEMP) and now at the final review stage. This master  plan will be adopted by the government for approval not later than the end of the third quarter of this year (2013 );
• The plan is drafted for a ten year implementation covering  industrial , commercial and housing with  energy saving targets in the  plan by time period are in a short term of 3 years at  2,774 GWh,medium term of 6 years at 14,840 GWh and long-term 10 years  at 50, 594 Gigawatthour(GWh);
• The targeted savings to be achieved from the Action Plan is valued at RM14.6 billion, based on current electricity tariff  and  aimed to reduce electricity demand by 5.6 % by the end of the 10th year;
• This reduction can delay  the need to build new power plants is estimated in the range of 3.6Gigawatt(GW)

In March 2011, the ministry presented the findings from the about 3-year study to prepare the national energy efficiency policy and master plan at another event which was during a workshop session to discuss the Terms of Reference for enacting legislation on energy efficiency and energy savings in Putrajaya Marriot Hotel and also attended by various government, agencies, energy efficiency professionals and experts as well as industry players. The findings from the same study were also shared again in workshops and seminars to enact  the same Act in November 2011 at Palace of the Golden Horses, Serdang.

With the implementation of the energy efficiency master plan, the additional savings which are more than the savings from electricity bills over the next 10 years we summarized as follows:

•  The cost of construction of new power plants up to RM16.6 billion can be avoided and fuel cost savings of RM22.8 billion for gas and RM1.4 billion for coal can be achieved too.
• The expected more savings in government spending to subsidize the cost of gas RM15.9 billion for electricity generation in the same period
• The amount of savings that can be achieved can also avoid the generation of new energy capacity projected to be required by approximately 3.6GW by 2020 by the Committee on Planning and Implementation of Electricity Supply and Tariff in March 2011.

So, in summary, the total impacts in term of energy cost savings from reduced consumption, avoided costs to build new power plants and fuel costs and also avoided subsidy payments for gas and coal to electricity generators from the implementation of the 10-year period master plan is as follows:

• RM14.6 billion savings from electricity bills and gas subsidies for new power plants at RM15.9 billion;
• Investments can be avoided by electricity generators such as TNB and IPPs at RM16.6 billion for new power plant construction and fuel costs for generation at RM22.8 billion for gas and RM1.4 billion for coal

Again, the Ministry of Energy, Green Technology and Water presented the same findings and energy cost saving potentials   at a seminar organized by MASHRAE on 25 April 2013 in Kuala Lumpur and  was also shared Just as much as RM987 million is needed in the 10-year period amounting to RM98.7 million a year. The target is set to reduce the energy consumption by 5.6 % but the year comparison as the baseline was not specified.

So, the total savings or impact that can be achieved is at about RM71.3 billion in 10 years where the government will have to spend the government of RM 987 million only within the same time.

 Based on our basic maths, on average, the amount of money that could be saved each year in the last 10 years is approximately RM7 billion and will be a lot more if electricity tariffs and fuel prices such as gas and coal rose in the same period of time.

Now let us together to imagine how much is that RM7 billion means to Malaysians and how many things can be done with that amount in one of which , the government does not need to raise electricity tariffs or increase only at the rate of a minimum so as not to burden the people.

Among the most frustrating thing is the ministry  has already spent a total of nearly RM2 million to conduct a study and prepare a plan of action since 2009 and was finished in 2011 but still give  delaying the action to forward the master plan for the cabinet to consider and decided. I could not really find any rational that any government would say no to such plan for the good of the people and the nation.

Lately Malaysians have often being shown the “facts” that Malaysia needs to consider nuclear power generation by source and at the same time a new power plants are being approved for construction to meet our energy demands.

The government did not seem to directly consider the findings of a study conducted by the government itself through the ministry in the country’s energy policies that will come in which there are still options that are more practical with the necessary costs incurred by the government which is cheaper at less than RM1 billion in 10 years instead of billions spent annually to subsidize the energy sector and consumers.

In addition, the ministry itself has also set aside nearly all of the views and opinions of all parties have been involved in the research and development of the master plan   from 2009 with no room for an objective and detailed discussions or answer questions posed in formal and informal means.

It is known that the ministry and its agencies do not have the capacity and expertise but offers to work together made by the industry players have faced with deaf ears especially from  the end of 2011.

Then more shocking news announced one after another by the ministry about the cancellation of the enactment of the new act to regulate energy efficiency in the end of 2012, the exclusion of thermal energy from the master plan in April 2013 and recently in August 2013 where the master plan will be downgraded to action plan instead when the Secretary General answered questions from the audience in the industry dialogue held by the ministry at Putrajaya International Convention Centre.

For the record, the plan to introduce the national energy efficiency master plan and the drafting of the new law to regulate energy efficiency implementation in Malaysia has been announced to the public through various press conferences by the Secretary General and the former minister since 2011 and also reported by mainstream newspapers.

Why still delay?

Is there any hidden agenda or problems with the attitude of responsible officials in the ministry by keep delaying the action to pursue the country's energy efficiency plan to be considered and approved by the government?

Why delay when it involves the interest of the people and much bigger long term benefits for greener Malaysia in the future for us and for our children?