MP: Is 1MDB power award a 'backdoor bailout'?
Published: Feb 21, 2014 7:00 AM
| Updated: Feb 21, 2014 7:58 AM
Tony Pua asks if giving Project 3B is to help the ailing finances of 1MDB.
Is the reported award of a coal-fired power plant to uncompetitive bidder 1Malaysia Development Bhd (1MDB) a "backdoor bailout for the financially-stricken company", asks Petaling Jaya Utara MP Tony Pua.
Citing a report in The Edge Weekly that 1MDB was apparently mired in "multi-billion ringgit loans" from its various high-cost acquisitions, Pua said: "It does not take a financial genius to wonder how 1MDB will be able to repay the principal on these multi-billion ringgit loans."
He asked whether this was the impetus behind the award of Project 3B, a 2,000MW greenfield coal-fired power plant, to 1MDB despite its bid being higher than others, and despite the Energy Commission's technical evaluation committee recommending the YTL Power bid.
'1MDB pursues reckless acquisition strategy'
"Therefore it seems to be the strategy for Prime Minister Najib Abdul Razak's administration to award a new independent power producer (IPP) concession to 1MDB, even if it means higher electricity costs for the man-on-the-street, in order to bailout the debt-stricken company and cover up, to some extent, its massive deficits," he said.
Pua said 1MDB has since 2012 "pursued a reckless acquisition strategy to takeover independent power producers with expiring contracts at very high premiums, financed almost entirely with loans".
These include the acquisition of Tanjong Energy Sdn Bhd for RM8.5 billion, Genting Sanyen for RM2.35 billion and Jimah power plant for RM1.2 billion, all costing a total of RM12.05 billion.
"However, as reported in the latest issue of The Edge Weekly, the cashflow generated by these acquisitions barely covers the annual RM650 million interest expense to finance the loans 1MDB took."
Ministry: Awarding of plant not started yet
Yesterday the Ministry of Energy, Green Technology and Water denied in a statement the award of the coal-fired power plant to 1MDB and it went on to call Pua's earlier statements "baseless and mere speculation".
According to Bernama, the ministry said the awarding of the contract for the plant has not started yet and would be announced "in due course".
"The process is transparent, in line with the competitive bidding system that has been put in place for the bidding of projects by IPPs, which is to ensure, among others, fairness and competitiveness," the Energy Ministry is reported as saying.
It said the plant is expected to start commercial operations on Oct 17, 2017.
Tenaga-China National Machinery Import & Export Corp is one of the five bidders, alongside 1MDB-Mitsui & Co, Formis Resources, YTL Power International and Malakoff Corporation Bhd.
Despite the Energy Ministry's denial of the award to 1MDB, Pua pointed out today that “The Edge clearly has information” to the contrary.
He added: “I am not only ready to be proven wrong, I also hope that I am wrong in thinking that the prime minister will prioritise the bailing out of 1MDB against lower cost of electricity to ordinary Malaysians.:
Citing a report in The Edge Weekly that 1MDB was apparently mired in "multi-billion ringgit loans" from its various high-cost acquisitions, Pua said: "It does not take a financial genius to wonder how 1MDB will be able to repay the principal on these multi-billion ringgit loans."He asked whether this was the impetus behind the award of Project 3B, a 2,000MW greenfield coal-fired power plant, to 1MDB despite its bid being higher than others, and despite the Energy Commission's technical evaluation committee recommending the YTL Power bid.
'1MDB pursues reckless acquisition strategy'
"Therefore it seems to be the strategy for Prime Minister Najib Abdul Razak's administration to award a new independent power producer (IPP) concession to 1MDB, even if it means higher electricity costs for the man-on-the-street, in order to bailout the debt-stricken company and cover up, to some extent, its massive deficits," he said.
Pua said 1MDB has since 2012 "pursued a reckless acquisition strategy to takeover independent power producers with expiring contracts at very high premiums, financed almost entirely with loans".
These include the acquisition of Tanjong Energy Sdn Bhd for RM8.5 billion, Genting Sanyen for RM2.35 billion and Jimah power plant for RM1.2 billion, all costing a total of RM12.05 billion.
"However, as reported in the latest issue of The Edge Weekly, the cashflow generated by these acquisitions barely covers the annual RM650 million interest expense to finance the loans 1MDB took."
Ministry: Awarding of plant not started yet
Yesterday the Ministry of Energy, Green Technology and Water denied in a statement the award of the coal-fired power plant to 1MDB and it went on to call Pua's earlier statements "baseless and mere speculation".
According to Bernama, the ministry said the awarding of the contract for the plant has not started yet and would be announced "in due course".
"The process is transparent, in line with the competitive bidding system that has been put in place for the bidding of projects by IPPs, which is to ensure, among others, fairness and competitiveness," the Energy Ministry is reported as saying.
It said the plant is expected to start commercial operations on Oct 17, 2017.
Tenaga-China National Machinery Import & Export Corp is one of the five bidders, alongside 1MDB-Mitsui & Co, Formis Resources, YTL Power International and Malakoff Corporation Bhd.
Despite the Energy Ministry's denial of the award to 1MDB, Pua pointed out today that “The Edge clearly has information” to the contrary.
He added: “I am not only ready to be proven wrong, I also hope that I am wrong in thinking that the prime minister will prioritise the bailing out of 1MDB against lower cost of electricity to ordinary Malaysians.:
View Comments 0