Rabu, 12 Mac 2014

The Energy Commission’s award of RM11 billion 2,000MW Coal-fired power plant (“Project 3B”) to 1MDB confirms earlier speculations and the complete lack of transparency and accountability

Media statement by Tony Pua, Member of Parliament for Petaling Jaya Utara and DAP National Publicity Secretary on Monday, 3 March 2014 in Kuala Lumpur
The Ministry of Energy, Green Technology and Water (KeTTHA) openly attacked me on 20th February that my comments regarding the tender for the 2,000 MW greenfield coal-fired plant or Project 3B was “baseless and mere speculation”.  I had earlier accused the Government of intending to make the award to 1MDB despite it not submitting the lowest bid for the tender to supply electricity to Tenaga Nasional (TNB).
However, exactly 8 days later on 28th February, KeTTHA confirmed my “baseless speculation” that 1MDB will be awarded the new Independent Power Producer (IPP) power plant concession.
In the statement by the Energy Commission (EC), it said that “the selection of the preferred bidder of Project 3B is based on the criteria of full compliance with all the bid requirements as stipulated in the request for proposal (RFP) document and the lowest levelised tariff offered”. The EC also announced that the power plant would involve a levelised tariff of 25.33 sen/kWh.
Where is the transparency and accountability promised based on the open tender system?
As highlighted in my previous statements, YTL Power has submitted a qualified and cheaper competing bid at a levelised tariff of 25.23 sen/kWh to supply electricity to TNB.  The Edge Malaysia has also reported that the levelised tariff by 1MDB was 25.65 sen/kWh.
Worse, the EC’s own technical evaluation committee had recommended YTL Power as the preferred bidder to the Board, based on documents sighted by The Edge, before the decision was overturned in favour of the more expensive 1MDB.
The question hence arises – were the goalposts shifted midway through the evaluation by the Ministry in order to justify and ensure that the 1MDB, which is facing financial difficulties, will win the concession?
Was 1MDB given unfair preferential treatment to allow the levelised tariff to be reduced from 25.65 to 25.33 sen/kWh?
More importantly, why was the lowest bid by YTL Power at 25.23 sen/kWh not deemed as the “lowest levelised tariff offered”?  As far as I can tell, despite the mysterious adjustments to the 1MDB tariffs, the 25.33 sen/kWh is still higher that YTL’s 25.23 sen/kWh.
In the interest of transparency, accountability and the credibility of this government, the EC must disclose the bids submitted by the vaious tenderers, and explain to Malaysians why the lowest bid was not chosen, especially since the Government overturned the recommendations of the technical evaluation committee.  This is highly important because at the end of the day, it is the rakyat who will be paying the higher tariffs for electricity as a result of the Government’s bias towards 1MDB, at the expense of the lowest qualified bid.
The Government cannot blame the rakyat for thinking that this is a clear-cut desperate attempt to prop up 1MDB, which is labouring under a mountain of debt estimated in excess of RM30 billion.
The debt has been accumulated in part because 1MDB has since 2012 pursued a reckless acquisition strategy to takeover independent power producers with expiring contracts at very high premiums.  1MDB acquired Tanjong Energy Sdn Bhd for RM8.5 billion, Genting Sanyen for RM2.35 billion and Jimah power plant for RM1.2 billion, costing a total of RM12.05 billion.
However, as reported by the last week’s issue of The Edge Malaysia, the cashflow generated by these acquisitions barely covers the annual interest expense to finance the loans it took.  It does not take a financial genius to wonder how 1MDB will be able to repay the principal of these multi-billion ringgit loans.
Unfortunately there are no right-thinking Ministers who are willing to speak up and object the pricier bid, and pick the concessionaire who will charge less.
Tony Pua

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