Tony Pua has condemned 1 Malaysia Development Berhad’s (1MDB) acquisition of a Tenaga Nasional Bhd (TNB) solar power plant project, calling it an effort to bailout the heavily indebted sovereign wealth fund.
TNB said yesterday, that it had signed another power purchase pact with 1MDB on the construction a solar power plant. 1MDB will design, construct, own, operate and maintain a 50 megawatts solar photo-voltaic energy facility in Kedah and supply electrical power to TNB. The project was awarded to 1MDB without any bidding exercise, prompting the Petaling Jaya Utara MP to say,
“The Prime Minister must provide the answer as to why 1MDB was awarded without any tender carried out, open or otherwise, despite the painstaking effort by the Energy Commission over the past few years to convince the power sector that the days where Independent Power Producers (IPPs) can win sweetheart contracts from the Government via direct negotiations are a thing of the past?”.
Pua also stated that the award completely by-passed the Sustainable Energy Development Authority of Malaysia (SEDA Malaysia), the statutory body formed under the Renewable Energy Act 2011 to manage the entire renewable energy sector. SEDA has been conducting bidding exercises by awarding strictly limited quotas not exceeding 30MW to companies and individuals interested in the provision of renewable energy.
“It is undeniable 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,” said Pua.
He went on to explain that the debt had been accumulated particularly because 1MDB had, 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.
According to The Edge Malaysia in February, the profit generated by the aforementioned acquisitions would not cover the annual interest from 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,” said Pua.
“Therefore, the man-on-the-street will have to brace for higher electricity prices in order to assist 1MDB achieve profitability and pay-off its multi-billion ringgit debt,” he added. -The Rocket
