News reports clarify the government's position that where Independent power producers (IPPs) which successfully renegotiate their Power Purchase Agreements (PPAs) will be exempted from paying the windfall profit levy. The exemption starts from the date the terms of the new agreement comes into force.
Second Finance Minister Tan Sri Nor Mohamed Yakcop said in a statement that the new move was to encourage progress in the negotiations.
A committee comprising the Economic Planning Unit of the Prime Minister’s Department, Finance Ministry and the Energy, Water and Communications Ministry would be set up to oversee and arbitrate the negotiations between the IPPs and Tenaga Nasional Berhad. Read the full report here.
So, it WAS a trade-off between the windfall tax and renegotiating the PPAs! It WAS a cojones-squeezing exercise! Ouch! See my earlier entries on the IPP saga Windfall tax seen hitting fund raising , IPP association urges govt to reconsider windfall levy and MALAYSIAKINI: MPs query 'extreme profits' for IPPs .
Well, so long as the resulting effect is the lowering of cost to consumers and greater transparency, I'm all for it, regardless of the approach.