Industry sources say that the Employees Provident Fund's decision to invest in power company Malakof Bhd's Intisna and Al Bai' Bithaman Ajil bonds was a judgement call that EPF has the prerogative to make.

Proper care and process had been taken in order to ascertain the viability of the Tanjung Bin Power Plant in Johore for which Malakof issued the bonds amounting to RM6.95 billion, they said.

Seven billion ringgit was, furthermore, not as exorbitant a price as PAS central committee member Husam Musa claimed, especially when compared to the country's two other power plants that cost more than RM6 billion each.

It would perhaps have been prudent for the Kubang Kerian MP to have dug deeper and referred to more industry experts before going public with his allegations, it was suggested.

Interests not threatened

EPF's deputy chief executive officer of management and organisational development Rusmah Ibrahim told malaysiakini that further discussion on the issue was pointless as the decision to proceed with the purchase of Malakof's bonds was the investment panel's call to make after having ensured the risks involved did not threaten shareholders' interests.

"It's a matter of opinion," she said, referring to the various objections raised by Husam at a press conference yesterday that included the allegation that the construction of the 2,100 MW Tanjung Bin power was 500 percent higher than that of Genting Group's Paiton Power Plant in Surabaya, Indonesia, which produces more power.

Husam had also questioned the AA3 rating given by the Rating Agency of Malaysia (RAM) to Tanjung Bin Power Plant's owner SKS, as Rangkai Positif, the operator and manager of the plant, had only been established eleven months ago.

"We have exercised due diligence on the matter, internally, and we have also sought external consultants. We stand by our position. There's nothing more that can be said on the matter," said Rusmah.

She did not, however, disclose the 'external consultations' that were engaged to study the investment in Malakof's bonds before they were purchased by EPF.

In response to Husam's claim that the power plant was over-priced, industry sources noted that RM7.8 billion was nothing out of the ordinary for coal-fired power plants in Malaysia, as such plants would normally entail considerable capital and operational costs.

Selangor's 2,400 MW Kapar Power Plant and the 2,100 MW Jana Manjung Power Plant in Perak reportedly cost RM6.27 billion and RM7 billion, respectively.

Call for review again

Contacted today, Husam said he was aware that Tanjung Bin Power Plant was in the same range as the other two coal-fired power plants in the country, but maintained his stand that the terms of the power purchase agreement (PPA) between TNB and Tanjung Bin's power plant owner should be reviewed.

"I still back my claims that the cost (of the Tanjung Bin power plant) is (relatively) expensive. I have brought this up in Parliament before, that the terms of this project are not good. There should be a review of the terms (in the PPA between TNB and SKS Power)." he said.

A review should be done on how projects are (generally) done in Malaysia, as the cost variations of power plants elsewhere in the region (such as in Indonesia and China) cost relatively lower per megawatt, Husam said.

"In Malaysia, the prices are marked up, not just in this (case) but other projects as well. In Surabaya the land costs are very low, but the technology (used to build and operate coal-fired power plants) cannot be that different.

"Tanjung Bin power plant is not at JB, where the land value is high, but at Pontian. Setting aside the land cost, the plant cost (at Tanjung Bin) is very expensive.," he said.

"For example, Shanghai Power Plant (owned by Huaneng Power International, Inc and operating with a 1,200 MW capacity), is still supplying (power) much cheaper per megawatt than this one."

"We need to get a clear picture of the matter and consider regional comparisons as well. We cannot restrict ourselves to Malaysia only. That would be similar to saying that everybody is playing the same game while it is not," Husam added.