Inflation, Inflation, & Salary Deflation.

When the price of fuel and gas went up, the minister said the price increase is to help the citizens reduce their spending by travelling less, use public transport, LRT, and using bicycles to work.

Now, the tariff increase for electricity, the minister said the new tariff structure will encourage consumer to conserve energy and the example cited is that consumer should not set their air-conditioners at 16 degree and that 24 degree is enough.

Again, the same old song: "Even with the 12% tariff increase, he said, Malaysia still had the cheapest electricity in the region with the exception of Indonesia."

Are we not tired of such surreal reasons

What the fuck type of lame excuses?

Dr Lim said TNB, which would make an additional RM1.5bil in revenue per year with the new tariff structure, would have to improve its service and reliability of supply in return for the tariff rise.

Leo Moggie, the chairman of TNB said the additional $1.5 billion would not solve their present cash flow deficit. However, CEO Che Khalib Mohamad Noh said this was better than nothing. "Beggars can't be chooser," he said.

TNB illustrated that they are facing a cash-flow deficit of RM1.38 billion for the FY ending August 31, 2006 and about RM4.4 billion in 2007, prior to the new tariff.

But do you know about cash-flow? It is total income minus total expenditure. What it means is that, each time TNB budgeted themselves to spent more than they earned, they would face cash flow deficit. Then, they would lobby the government to cover the shortfall by way of increase tariff or by way of compensation. So, even if the government increase the tariff by 200%, which would translate to some RM25 billion dollar extra revenue for TNB, the management can still put up a projected deficit cash flow with expenditure increase of 200% too, which means their cash flow position can forever be made negative and in deficit.

Aren't we being stupid? The main problem facing TNB is the high cost of their IPPs.

The extra cash of RM1.5bil from the tariff increase would eventually be used to pay RM1.3bil in capacity payment to Malakoff’s Tanjung Bin plant once the IPP reaches maximum capacity. About RM630mil in capacity payment is scheduled be paid to Malakoff by the end of this year.

“That's why the negotiations with IPPs will ease the deficit. This is a two-pronged approach," Che Khalib added.

TNB, which is seeking to cap capacity payments to IPPs at 70% of their full output, has appointed investment banker Rothschild as a consultant for the negotiations.

Brace yourself to mammoth inflation which is currently at 4.5%. It is set to rise and eat up your income drastically.

However, brace yourself towards salary deflation as the economic indicators are set downwards in the long-term. In the near term, the various development projects under 9MP will cushion off some heat generated.