Dubious power deals given to the debt-laden 1Malaysia Development Berhad would end up hitting consumers hard in the wallet, a DAP lawmaker has claimed.
In a statement today, DAP Petaling Jaya Utara MP Tony Pua said that as a result of several lucrative independent power producer (IPP) concessions awarded via direct negotiation to 1MDB, consumers will have to fork out more for power.
“I had, in a previous speech, asserted that Malaysians will have to pay higher electricity prices because 1MDB was awarded the deals without any open tender. Such direct awards went directly against the publicly-stated principles of the Energy Commission to adopt open tender practices in order to promote competition in the industry,” Pua, who is also Public Accounts Committee member, said.
Pua said that among the contracts awarded to 1MDB included a 2,400MW combined-cycle gas-turbine power plant in August 2014 and a 50MW solar farm in March 2014. In addition, 1MDB was also awarded a 2,000MW coal-fired power plant in February, after the lowest tariff bid by YTL Power was controversially disqualified on a technicality.
Pua said the government’s move to allow 1MDB power plants — which have yet to commence construction — to raise tariffs makes the situation even worse.
“I had argued that the tariff will be higher for Malaysians in the future because the government will award 1MDB with more lucrative tariffs in order to create more profits for the firm to pay off its RM42 billion debt.
“However, the situation is even worse than I had anticipated, because the Government has agreed to raise the tariff rates for 1MDB power plants even before their construction have even commenced,” he added.
Pua pointed out that it was reported on Monday in The Edge Financial Daily that the Energy Commission has already approved an increase in tariff for the solar power plant, from 41 sen per kWh to 50 sen per kWh.
“That represents a whopping 22% hike in electricity tariffs within a year after the project has been awarded via direct negotiations. The power supply will be sold to Tenaga Nasional, which will in turn transfer the cost burden to consumers.
“The paper also reported that 1MDB is in the process of ‘disposing’ its winning bid for the 2,000MW coal-fired power plant which it won via the controversial open tender. This is because the debt-laden and cash-stricken 1MDB has no money to fund the project. Furthermore, no bank is willing to lend any more money to the company,” Pua added.
He said that if the government is truly concerned with the interest of the ordinary man, then surely the right thing to do will be to cancel all of the recently awarded power plant concessions to 1MDB.
“This is simply because 1MDB has failed to produce the necessary funds to start the construction. The power plants should instead be tendered out in an open and transparent fashion so that the most financially-strong and experienced companies, which bid at the lowest tariff rates, should be awarded the contracts,” he added.
– The Rocket
