Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 20th of June, 2015
During last Thursday’s debate to amend the Electricity Supply Act (1990), I asked Minister of Energy, Green Technology and Water, Datuk Seri Maximus Ongkili, on the latest update on Project 3B, a 2000MW coal fired power plant project which was awarded to 1MDB (70%) and Mitsui (30%). The Energy Commission was supposed to announce the decision sometime in February but no updates had been forthcoming until the Minister’s statement on Thursday.
In his reply, the Minister confirmed that the cabinet had indeed given the approval for TNB to take over Project 3B from 1MDB. He also confirmed that there would be a “small revision” to the power tariff given that the project was already six months late and the exchange rate has changed since the project was first awarded to 1MDB. The Minister did not disclose the terms of purchase of Project 3B by TNB from 1MDB citing that it was on a “willing-buyer-willing-seller” basis.
The Minister’s reply is totally unacceptable for the following reasons:
Firstly, since 1MDB is a 100% Ministry of Finance owned company and has been the subject of national and international headlines and since TNB is a Government Linked Company (GLC) which is one of the largest listed entities on the KL Stock Exchange, there is public interest at stake in terms of the terms which TNB offered to 1MDB in exchange for Project 3B.
The haphazard fashion in which the Minister made this announcement – the government had not even notified TNB of its decision – created massive uncertainty in the stock market and caused TNB’s share price to drop by 50 sen from RM13.10 toRM12.60 on the day of the announcement because of fears that TNB was being asked to “bail-out” 1MDB. Only after TNB CEO, Azman Mohd, came out with a statement reassuring the public that TNB would not pay a premium for 1MDB’s 70% stake in Project 3B did the share price of TNB recover to RM12.86 the next day.
For the sake of transparency and in order to reassure the markets, the Minister must disclose or ask TNB to disclose the terms of the agreement between TNB and 1MDB over the sale of Project 3B.
Secondly, the Minister cannot wash his hands of the TNB-1MDB Project 3B agreement using the “willing-buyer-willing-seller” excuse since the Project 3B license is under the Energy Commission. The Energy Commission has the right to fine 1MDB for not being able to start Project 3B on time and it has the right to transfer the license to TNB. In fact, one of the reasons for the amendments to the Electricity Supply Act (Section 9B in particular) is to increase the power of the Energy Commission over those who have been awarded the license to generate electricity.
Those in the electricity generation business i.e. the license holders must know if the Energy Commission is willing to impose harsh fines on those who fail to live up to the terms in the licensing agreement. Without these details being made public, other license holders may think it can ‘get away’ with delays and shortcuts in the fulfilment of the licensing agreement.
Hence, for these two reasons, the Minister must compel the full disclosure of the TNB’s takeover of 1MDB’s stake in Project 3B as well as the fines imposed on 1MBD as a result of its inability to deliver on Project 3B.