The Malaysian government says it will not intervene in a debate between the national utility Tenaga Nasional Bhd and independent power producers (IPPs) over renegotiation of payment terms. Tenaga has appealed for deferment of payments and discounts to the current rates being charges by IPPs.

The utility will attempt to renegotiate existing contracts with each IPP individually. However, the government stressed that existing contacts must be honoured unless the two parties want to renegotiate.

In a separate move, Tenaga announced the privatization of the Sabah Electricity Co which operates in the state of Sabah, East Malaysia. The company is owned by Tenaga, the Malaysian Government and the Sabah Electricity Board. Sabah Electricity will supply power to Sabah and the federal territory of Labuan for 35 years.