Mahathir shows caution on electricity deregulation

Mahathir shows caution on electricity deregulation

KUALA LUMPUR (AP): Citing the fiasco in California, Prime
Minister Mahathir Mohamad said Monday that his government will be
cautious about deregulating the government-controlled electricity
sector.

"Because of the disastrous experience of California many,
including Malaysia, are more cautious in restructuring the
electricity industry. It is too important an industry to be left
entirely to market forces," Mahathir said in a speech at a
conference on electricity.

The Malaysian government, currently studying ways to
restructure the sector, was expected to introduce a power-pooling
system in 2005 in which generation companies would compete to
supply electricity and electricity would be traded like a
commodity.

But poorly thought-out deregulation of the California power
sector has led to electricity shortages in America's richest
state, forcing blackouts and politically unpopular price hikes.

Asian countries have been spooked by the California
experience. Many countries are already grappling with strategies
to ensure adequate power supply over the next decade to cope with
expansion in manufacturing.

Mahathir said the current electricity sector structure has
served the country "well' and that changes will have to be done
gradually.

"It would be better to progress one step at a time and with
enough time to measure the effect of those changes before
proceeding with the next," Mahathir said.

Mahathir said electricity peak demand in peninsular Malaysia
is projected to grow by more than 117 percent to 21,668 megawatts
in the year 2010. He said the peak demand in peninsular Malaysia
so far this year was 9,948 megawatts.

The national power utility, Tenaga Nasional, has proposed that
the government restructure the sector to a "managed market
model", with Tenaga continuing to be a dominant power generating
company.

Tenaga, which is 78 percent-owned by the government, said this
would avert Malaysia from having a California-type power crisis.

Tenaga was to sell off part of its power-generation assets to
open the market to competitors. Late last year, Tenaga put on
hold a plan to sell some assets until the government's plans for
restructuring became clear.