DR. KAMARIAH NORUDDINDIRECTOR, ENERGY SECTION

ECONOMIC PLANNING UNIT, PM’s DEPARTMENT

3RD ENERGY FORUM12TH JULY 2011

ENERGY POLICY SHIFT AND

KEY ENERGY PROJECTS

TOWARDS SUSTAINABLE

ENERGY FUTURE FOR

MALAYSIA

1

2

Policy Directions

Energy Policy Shifts

Key Energy Projects

Way Forward

Outline of Address

3

Policy Directions

Energy Policy Shifts

Key Energy Projects

Way Forward

Outline of Address

1. Creating the environment for unleashing economic growth (including NKEAs)2. Moving towards inclusive socio-economic development3. Developing and retaining a first-world talent base4. Building an environment that enhances quality of life

5. Transforming government to transform Malaysia

10MP StrategicThrusts

4

NEAC

1. Government’s

Role in Business

2. Public Finance

Reform

3. Human Capital

Development

4. International

Standards &

Liberalisation

5. Public Service

Delivery

6. Narrowing

Disparities/

Bumiputera SMEs

Strategic reform

initiatives

(SRIs)-

Concluding Part

Major Initiatives Of National Transformation Towards a

High Income Economy

NEAC

1. Re-energizing the

private sector

2. Developing a

quality workforce

3. Creating a

competitive

domestic

economy

4. Strengthening the

public sector

5. Transparent and

market friendly

affirmative action

6. Building the

knowledge base

and infrastructure

7. Enhancing the sources of growth

8. Ensuring

sustainability of

growth

Strategic reform

initiatives

(SRIs)-Part 1

PEMANDU

1. Crime

2. Education

3. Corruption

4. Low Income

Households

5. Urban Public

Transport

6. Rural Basic

Infrastructure

National Key Result Areas(NKRAs)

CHAPTER 2: BUILDING ON STRENGTHS OF THE PAST

2010

RM552.1 bn

-99.1%

109.9%

11.8%10.2%13.4% 53.6%

6% p.a.

2015

RM740.3 bn

-111.6%

116.0%

11.2%13.9%12.6%58.0%

GDP growth

Share to GDP by contribution

7.7

4.8

12.8

5.0

7.2

8.6

Exports

Imports

Public Consumption

Private Consumption

Public Investment

Private Investment

SOURCE: Economic Planning Unit

Private Investment9th MP ~ RM 71.2 billion per annum10th MP ~ RM 115.3 billion per annum

Growth (%) per annum, 2011-2015

Overall 6.0

7 Core Strategies to economic reform

•Creating a private sector-led economy

1

•Supporting innovation-led growth

2

• Rationalising the role of government in business 3

• Developing SMEs as an engine of growth and innovation

4

•Competing globally 5

• Putting in place the infrastructure for growth

6

•Focusing on key engines of growth

7

▪ Modernise business regulation and liberalise the services sector

▪ Remove market distortions by rationalising subsidies

▪ Introduce Competition Law to govern all firms and improve interface between government and business

The challenge: to move from an economy that competes on low cost and natural resources, to one driven by productivity and innovation

Macroeconomic Strategies: GDP growth to be driven by private investment

5

2-year Rolling Plan1st Rolling Plan

2011 - 2012

Tabled in Mid 20106 months earlier from

plan cycle

Value ManagementProject planning and

implementation

Logical Framework & Project Cycle Management

Complement the rolling plan concept

New Approaches in Development Planning…

6

Identify 85

initiatives in

10MP

Prioritise

initiatives

Categories

initiativesDevelop implementation

plan

• Lead ministry/agency required to

complete templates and submit to EPU

• Input from relevant ministries / agencies

to be incorporated into implementation

plan

Chapter

3

Chapter

4

Chapter

5

Chapter

6

Chapter

7

24 initiatives

14 initiatives

10 initiatives

23 initiatives

14 initiatives

EPU-supported:

11 initiatives

Centrally-

guided:

32 initiatives

Ministry-led:

42 initiatives

Prioritise initiatives

based on:

• Criticality of

initiative to the

nation's development

• Complexity of the

implementation of

initiative

Summarise all

initiatives in 10MP

by chapter

Initiatives prioritised

and bucketed into

3 categories

Prioritisation of

initiatives by

chapter

10275442-01-Presentation to NPDC 10Aug2010-JL-Draft-v4-RR.ppt

Implementation plan—Talent Corporation (I)Capture existing projects and detail areas not covered by existing plans

Define roles and

responsibilities of the

Talent Corporation

Define organization

structure and key

positions

Prime Minister's

Department

Prime Minister's

Department

Dec 2010

Feb 2011

Define the mission, vision and

strategic goals of the Talent

Corporation

Define the specific role of the

Talent Corporation in public sector

enablement and private sector

development support

Design the organization structure

and define the role mandates and

KPIs for key positions

OwnerOwnerTarget

date

Target

date Action planAction planMilestoneMilestoneExpected

outcomes

Expected

outcomes

Operating

model of the

Talent

Corporation

defined

Organization

structure, key

positions, and

KPIs defined

SAMPLE

Captured in existing plans Plan owners

PMO

BackupIllustrative – For discussion only2

PMO

1. Set initiative

milestones

2. Highlight responsible

owner

4. Develop detailed

action plans

3. Agree on target

deadlines

5. Determine

target outcomes

–

+

– +

Completed by

project team1

Templates for lead

ministry/agency to fill2Alignment

with lead

ministry/

agency3

1

2

3

4

5

22

21

20

19

18

1716

15

1413

12

11

10

98

7

5

6

5

4

3

2

1

24

23

4321

–

–

7

Development of the 10MP Implementation Plan & Templates

7

10th Malaysia Plan Target Q1 2011 Status

Target for 2011

GDP Growth : 5.0 – 6.0 % 4.6%

GNI per capita : RM 28,175 (US 9,204)

RM27,780 (US$9,101)

Private Investment : RM87 billion RM 28 billion

Current Account (BOP) : 12.5% of GNI

15.3%

Inflation (CPI) : 2.5% - 3.5% 2.8%

Unemployment Rate : 3.2% 3.1%

Economic Performance

Source : Economic Planning Unit

8

9

Policy Direction

Energy Policy Shifts

Key Energy Projects

Way Forward

Outline of Presentation

Increasing Energy

Demand

EE Initiatives

New Energy Sources

Declining Energy

Reserves

2019

Energy

Demand-Supply Gap

2025Year

Net

Exporter

Net

Importer

Energy demand is projected to increase from 2,000 PJ in 2009 to 4,013 PJ in 2030 Average rate of 3.6% p.a.

Energy Demand-Supply Balance

Energy Pricing

Energy Supply

Energy Efficiency

Governance Change Management

FIVE PILLARS

The New Energy Policy addresses economic efficiency, security of supply & social and environmental objectives

11

Gas Price Revision

Initiative 3 under the 10th MP

Removing Market Distortions

by Rationalising Subsidies

12

Similar Initiative – 10MP & New Economic Model

13

Revision of gas prices for power and non-power sectors effective 1 June 2011

Increase in gas price by RM3/MMBtu every 6 months

Effectively gas price on average is still subsidisedby almost 70%

Market price by 2016

Resource Allocation

Energy Efficiency

Renewable Energy

Environment

Entrance of New Players

Energy PricingEnergy Pricing

Energy Pricing

Itemising subsidy in consumers’ bill

Educate consumers

De-link subsidy from energy use

End goal is to remove subsidy

Decoupling Approach for Market Pricing

14

Restricted tender for new power plants in brown fields

Establishment of MyPower

Liberalisation of gas supply

Enhancing roles and functions of regulators

Governance

15

Policy as a strategic package

Phased implementation of change

Change Management

16

SAVE programme - rebate for selected energy efficient electrical appliances

Formulation of Energy Efficiency Masterplan

Energy Labeling and Minimum Energy Performance Standards (MEPS)

Green Building Index (GBI)

Energy Efficiency

17

18

Policy Direction

Energy Policy Shifts

Key Energy Projects

Way Forward

Outline of Presentation

• Regasification Terminal in Malacca to operate by August 2012

• Regasification Terminal in Lahad Datu to operate by 2015

• Tanjung Pengerang, Johor to operate by 2016

LNG Regasification Terminals

• RAPID to operate by 2016

Refinery and Petrochemical Development

Supply Side Initiatives : Oil & Gas Development

19

• 300MW Kimanis Power Plant to be commissioned by 2013

• 100MW SPR Power Plant (Kimanis) to be commissioned by 2013

• 300 MW Lahat Datu to be commissioned by 2016

Gas Plants

• 1000MW Janamanjung to be commissioned by 2015

• 1000MW Coal Plant to be commissioned by 2016

Coal Plants – Ultra Super Critical Technology

• Bakun 2400MW [to be commissioned by August 2011 for 300MW]

• Ulu Terengganu 250MW to be commissioned by 2016

• Ulu Jelai 372 MW to be commissioned by 2017

Hydro Plants

Supply Side Initiatives : Generation Capacity

20

• Peninsular Malaysia network expansion (allocation of RM4-5 billion annually by TNB)

• Sabah Transmission line expanded by 93km in 2012

• To maintain the System Average Interruption Duration Index (SAIDI) in Sabah at 700 minutes/customer- RM200 mil. allocated for 2011

Transmission & Distribution

• 66,000 rural homes will have access to electricity by 2012

• Electricity coverage by 2012 :-

• Peninsular 99.9 %

• Sabah & Sarawak 95 %

Rural Electrification Projects

Supply Side Initiatives : Electricity Coverage

21

• Biomass, biogas, mini hydro, solar and solid waste

Renewable Energy

• 985MW or 5.5% of generation mix by 2015

• RE Act 2011 passed in April 2011

• Sustainable Energy Development Authority (SEDA) to be established by September 2011

• Feed-in-Tariff (FiT) – 1% of consumers’ monthly bill beginning September 2011

Target of RE in the Energy Mix

Supply Side Initiatives : Renewable Energy

22

• Government Agencies used B5 since February 2009

• B5 Programme to be implemented in Central Region of Peninsular Malaysia by 1st November 2011

B5 Programme (Blended bio-fuel 5%)

• RM 1.5 billion incentive for 10 MP

Green Technology Financing Scheme (GTFS)

• Projects include biomass, biogas and landfill projects

• Certified Emission Reduction issued to 10 companies totaling to 1,231,655 tonne of CO2 equivalent

Clean Development Mechanism

Other Initiatives : Renewable Energy

23

24

Policy Direction under 10th Malaysia Plan

The New Energy Policy

Key Energy Projects

Way Forward

Outline of Presentation

Efficient use of energy

Diversified & responsive energy supply

Efficient resource allocation

High value economic development

Vision for the Future

25

THANK YOU

26