MP SPEAKS The direct award by Tenaga Nasional Bhd (TNB) to 1Malaysia Development Bhd (1MDB) of a 50 megawatt (MW) solar power plant has proved this is a desperate attempt by the Najib administration to bail out the heavily indebted sovereign wealth fund.

It was bad enough for the power sector when the Energy, Green Technology and Water Ministry shifted goalposts with the qualifying criteria, to award 1MDB a 2,000 MW coal-fired plant on Feb 28 despite offering a higher power tariff in an ‘open tender’ exercise.

Yesterday, TNB said it had signed another power purchase pact with 1MDB on the construction of a solar power plant. 1MDB will design, construct, own, operate and maintain the solar photovoltaic energy facility in Kedah and supply electrical power to TNB.

Unlike the first award - where, at the very least, the pretence of an open tender was carried out - the latest award is a blatant outright award to 1MDB without any bidding exercise.

The prime minister must provide the answer. Why was 1MDB awarded this without any tender exercise being carried out, open or otherwise?

This comes 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.

Worse, this award completely bypassed the Sustainable Energy Development Authority of Malaysia,the statutory body formed under the Renewable Energy Act 2011 to manage the entire renewable energy sector. 

It has been conducting bidding exercises by awarding strictly limited quotas not exceeding 30 MW to companies and individuals interested in the provision of renewable energy.

Hence, while all other companies need to compete for the limited quotas to supply solar energy, 1MDB has received a bumper direct award of 50 MW.

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.

The debt has been accumulated particularly because 1MDB has since 2012 pursued a reckless acquisition strategy to take over IPPs with expiring contracts at very high premiums. It acquired Tanjong Energy Sdn Bhd for RM8.5 billion, Genting Sanyen for RM2.35 billion and Jimah power plant for RM1.2 billion - a total of RM12.05 billion.

However, as reported by the The Edge in February, the cashflow generated by these acquisitions barely covers the annual interest expense to finance the loans 1MDB 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.

Hence, as a result of mismanagement and reckless policies by the Najib administration and 1MDB, all the basis of good governance is set aside, despite the prime minister’s promise of transparency and accountability in the Government Transformation Programme.

Therefore, the man-on-the-street will have to brace for a higher electricity tariff in order to assist 1MDB achieve profitability and pay-off its multi-billion ringgit debt.

TONY PUA is the DAP’s member of parliament for Petaling Jaya Utara.