KOTA KINABALU – Sabah is facing the grim prospect of a statewide blackout beginning in January if urgent financial assistance does not come through from the federal government, warned Datuk Seri Wilfred Madius Tangau, chairman of Sabah Electricity Sdn Bhd (Sabah Electricity), formerly known as SESB.
With less than two months left, Tangau expressed deep concern over the lack of sufficient allocation for Sabah’s power subsidy in the latest national budget.
“I don’t think people understand how critical this problem is. The federal government cannot simply say they have no money now. This is not just about energy security, but by extension, national security as well,” he said.
Tangau, who is also Tuaran MP and Upko honourary president, disclosed this in an exclusive interview, underscoring that the state’s power supply system is on the brink of collapse.
The electricity tariff in Sabah has remained at a subsidised rate of 34.52 sen per kWh since 2014, despite the rising costs of generating and purchasing power.
Sabah Electricity currently produces only 20% of the state’s power, with the remaining 80% sourced from Independent Power Producers (IPPs) at an average cost of 43 sen per kWh, a legacy that has been hounding Sabah Electricity for years.
This difference in cost, Tangau noted, has been recovered by way of tariff support subsidy and fuel subsidy from the federal government after spending in advance to ensure sustainable power supply despite running at 10 sen losses per unit of electricity.
However, this year, the difference in cost has grown bigger as Sabah Electricity had to spend more in purchasing more diesel to generate power as an immediate alternative to delays in the commissioning of a few generation plants to come on stream – particularly the 66MW Tenom Pangi hydro which was affected by a landslide and mudflow in October 2022.
Under the incentive-based regulation regime, any gap in the generation cost approved by the regulators is to be recovered by passing through to the consumer or to be recovered from the government by way of subsidy.
Despite the Sabah state government’s pleading for additional funds, the federal government has informed that they cannot consider the additional budget, leaving Sabah Electricity unable to sustain operations.
“I was made to understand that the state government has sent an appeal letter to the federal government. In light of the situation, Sabah Electricity will also be sending a similar appeal letter to the Federal Finance Ministry with immediate effect.
“Sabah Electricity’s cash flow is running into a deficit. Without immediate support, we won’t have the money to pay the IPPs and fuel suppliers, then the fuel supply to the power plant will be blocked and the entire system will collapse.
“There is absolutely no alternative. The chain reaction would impact hospitals, airports, water supplies, and essential services,” Tangau warned.
Severe impact on essential services
Tangau stressed that the implications of a total blackout go far beyond mere energy security – they also threaten national security.
“Imagine what would happen to security forces, the medical and healthcare system, airport operations, water supply, telecommunications, transportation systems, and the entire government service network without electricity,” he said.
A prolonged power outage would cripple essential services, potentially grounding airport operations, interrupting hospital care, and disrupting water treatment facilities, impacting every level of society in Sabah.
This critical situation has been compounded by a letter from the Energy Commission of Sabah, which informed Tangau that the RM866 million electricity subsidy required for 2024 would not be considered due to fiscal constraints.
Tangau insists that federal assistance remains indispensable.
“The government cannot overlook this issue. The risks of neglecting Sabah’s energy needs are too high,” he asserted, reiterating that ensuring stable power is a matter of both state and national security.
With January fast approaching, Tangau’s call for federal action remains urgent. The stakes are high, with the potential for widespread disruption to essential services if the federal government does not act swiftly. – November 4, 2024