Confusion? Flip Flop? or Wayang?

What do you make of Khairy's latest proposal here? Full link here - http://themalaysianinsider.com/index.php/home/42-lead-stories/962-khairy-explains-how-to-ease-price-hikes

Khairy explains how to ease price hikes

PARLIAMENT, June 23 — Rembau MP Khairy Jamaluddin broke his no-comment rule and held a press conference in the Parliament lobby in the afternoon to elaborate on his proposal to the government on how to ease the burden of price hikes on the people.

"Any tax goes straight to the federal government (right now). The government should find ways to...take the tax and pass it straight back to Tenaga [1]," he said.

Currently, if the price of gas and coal go up, so do the tariffs [2] on electricity. This, Khairy said, is built into the present power purchase agreements [3].

"What I didn't get to explain earlier...We should have a pooling system. Tenaga should buy from the cheapest supplier. The whole structure should change. The IPPs (independent power producers) should come forward as responsible corporate players [4]," he added.

He refused to entertain other any other questions but confirmed that he was running for the Rembau Youth chief post and was up to face challenges for that position because "Umno is a democracy".

He added that he had not yet decided if he was going to run for the national Youth chief post.

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My comments:

[1] When I first read this article, I am confused!

Without specific proposals, how does one evaluate this press conference which Khairy has called for?

Reading this, it appears that this is just Khairy blabbering in public without the presence of Tenaga and IPP executives. He does not appear to have a specific proposal to announce.

Is he trying to claim credit for something that is a fait accompli later?

Is Tenaga going to benefit, lose or remain neutral from this vague press conference?

Is IPPs going to benefit, lose or remain neutral from this vague press conference?

What about Rakyat?

Will this be another Flip Flop where electricity tariffs is raised and then, later reduced?

[2] I think this is potentially misleading.

Of course, at the end of the day, the government can choose to do what they like.

I believe most analyst understands that when the market prices of gas and coal goes up (or down) daily, the electricity tariffs might stay stable for some time (e.g. a month, maybe longer if the government doesn't approve the tariff adjustment).

I believe (although I'm just guessing) that Tenaga currently don't have an explicit, transparent nor automatic tariff adjustment formula with the government.

Instead, I believe every tariff increase proposal requires explicit government's approval.

Whereas Khairy's statement appears to project the mirage that government's approval is just a formality, and this situation has been and will be the case which is an open question ... I really don't like what I'm reading here.

[3] Is [2] really built into all (or just some) power purchase agreements?

[4] After all these years in trying to get all the IPPs to come out as responsible corporate players and failed, is Khairy now thinking that he alone (via this press conference) will be able to get all the IPPs to agree to a change in the entire structure at lesser cost?

I don't believe the young MP is that naive.

If not, is he trying to pull a "wayang" over the markets eyes?

Knowing the IPPs, the only way Khairy is going to get them to agree to a contractual change is to provide them with better and/or longer compensation period.

I.e. it's going to cost Tenaga more.

And if so, will we end up seeing more Federal and tax monies being used and channeled to further increase firstly IPP profits, secondly Tenaga profits, and perhaps thirdly partly alleviate the burden for the poorer Rakyat?

In other words, all this at the expense of the middle and above middle class?

How much will it cost? Isn't the slippage potentially large?

Rereading the title of the article, I think a more appropriate title should be "Khairy creates more confusion on how to ease price hikes".