The Energy Commission (EC) should be doubly ashamed of itself for failing to conduct an open tender for Independent Power Plant (IPP) and had to be taught by an IPP concessionaire on how such contracts should be awarded

 

 

Media Statement by Tony Pua, Member of Parliament for Petaling Jaya Utara and DAP National Publicity Secretary in Kuala Lumpur on Friday, 20 June 2014

While YTL Power had benefited significantly from directly negotiated Independent Power Producer (IPP) contracts in the past, we applaud the latest decision by the company to reject the recent “directly negotiated” offer by the Energy Commission to build a new gas-turbine power plant known as Project 4A.

 

It was widely assumed that the YTL consortium was hastily awarded this contract as “consolation” after it failed to win the Project 3B 2,000MW coal-fired power plant project.  They failed to secure Project 3B despite the fact that they were the lowest price bidders because the concession was controversially awarded to 1Malaysia Development Bhd (1MDB).

 

However the Project 4A award was not only directly negotiated, the terms of the award were vague, unspecific and flimsy.  Neither the size of the plant (1,000MW to 1,400MW) was fixed nor was the exact tariffs finalised – except to say that it must be “comparable to the last tender exercise”.

 

Worse, even the consortium arrangements between YTL Power, SIPP Energy Sdn Bhd – a company associated with the Sultan of Johor, and Tenaga Nasional Bhd (TNB) were up in the air.

 

Hence it could not be more obvious that the EC was manipulating the entire award process to favour specific concessionaires with total disregard to good governance, competitive tendering and transparency.

 

The above were not the only controversial IPP awards this year. The EC has also awarded a 50MW solar power plant concession to 1MDB via direct negotiations before the tariffs were even finalised.

 

Therefore under the circumstances, Malaysians would have expected the YTL consortium to gleefully accept the award and perhaps laugh all the way to the bank.

 

Instead, in order to avoid any misconceptions and perhaps to redeem the image of the YTL Group, “YTL Power has decided not to participate in the Project under the present arrangement to dispel any misgivings over the Government’s commitment to transparency and good governance.”

 

This is the first time in history a company has publicly rejected a multi-billion ringgit directly negotiated concession from Government. We must applaud YTL Power for believing in the need for free and fair competition, as well as in its own ability to win these tenders on merit.  Credit must be given where it is due.

 

Ironically however, the “sacrifice” was done to protect “the Government’s commitment to transparency and good governance.”  The rejection is a clear slap in the face of the EC and the opaque practices of the Malaysian Government.

 

The EC should be thoroughly ashamed that their complete lack of transparency and good governance had to be exposed by a concessionaire.  It has made a mockery of EC’s mission and objectives of creating a competitive environment in the country’s energy sector to ensure the lowest possible electricity tariffs for ordinary Malaysians.

 

We call upon the EC to own up to its failure to protect the interests of Malaysians, and announce irrevocably that all future IPP awards, whether solar, gas, coal or any other form of fuel source will be conducted via a open and competitive tender. 

 

We will also call upon all other patriotic and responsible corporate citizens in all sectors, to follow the example set by YTL Power - that is to reject all directly negotiated awards by the Malaysia and requesting that all such awards should be conducted fairly via open tenders.  Where the Government has failed miserably, is it too much to hope perhaps that Corporate Malaysia can lead the way?

 

 

 

Tony Pua