1MDB Awarded Contract Via Direct Negotiation
(The Sun Daily) – The Government has awarded 1Malaysia Development Bhd (1MDB) a contract to build a 2,000-megawatt (MW) power plant in Malacca via direct negotiation.
The Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili confirmed awarding the multi-billion contract to 1MBD via a written reply to DAP lawmaker Tony Pua last week.
Pua had earlier asked the ministry if the award for the plant that is only scheduled for commissioning in 2021 had already been awarded to 1MDB, and if the project is vital for 1MDB’s listing exercise.
Pua claimed that the government is bailing out the Federal Government-sponsored fund which has acquired several projects this year.
1MDB’s proposed listing of its power assets has been pushed to 2017, forcing the fund to restructure the debts that are tied to the power assets it bought two years ago.
“The rapid succession of multi-billion ringgit power producing contracts awarded to 1MDB proves that the Federal Government is pulling all the stops to ensure the viability of the Initial Public Offering (IPO) of the 1MDB’s energy arm,” he told a press conference in Parliament on Tuesday.
The Association of Water and Energy Research Malaysia (Awer) blasted the government for awarding the new gas powered plant to 1MDB via direct negotiation.
Its president S. Piarapakaran said he was upset that the government had gone back on its promise of awarding future power plants through transparent competitive bidding.
“It is totally uncalled for and makes no sense to award the gas power plant seven years ahead of time,” he told SunBiz when contacted on Tuesday.
“The Minister of Energy, Green Technology and Water and chairman of Energy Commission (ST) should resign,” said Piarapakaran.
Recently, the Ministry of Energy, Green Technology and Water and ST came under fire for awarding Track 4A via direct negotiation to a consortium that included Tenaga Nasional Bhd (TNB), SIPP Energy Sdn Bhd and YTL Power International Bhd. YTL Power subsequently withdrew from the consortium amid the controversy.
Piarapakaran said technically, there is still sufficient time to construct a new plant via a transparent competitive bidding process since a gas powered plant takes only about three years to complete.
He also questioned the basis for awarding 1MDB the contract via direct negotiation when the sovereign fund only recently was awarded the 2,000MW coal-fired power Track 3B plant project.
1MDB was awarded the RM11 billion project to build and operate Track 3B in March this year and it is slated to be commissioned in stages starting from 2018.
“1MDB has no track record in building a power plant. Track 3B has not yet taken off and so on what basis were they awarded the contract?,” he asked.
Piarapakaran urged the authorities to come out and explain to the public its justification for the direct negotiation of the new plant awarded to 1MDB.
He reiterated that the reduction in the cost of establishing a power plant only can be achieved via a transparent competitive bidding process where savings achieved from the bidding process can be passed on to electricity tariffs for more than 20 years.
Piarapakaran also cautioned that the precedent set by the authorities will have a negative perception on how investors view Malaysia.
