1MDB facing cash flow problems to fund IPP project, says ministry

(Malay Mail Online) – Liquidity issues at 1 Malaysia Development Bhd (1MDB) will cause it to miss the deadline to start operations of the 3B power plant, the Energy, Green Technology and Water Ministry said today.

In a written reply to Serdang MP Dr Ong Kian Ming (pic), the ministry said that 1MDB is having problems raising funds for the Jimah East Power project at Mukim Jimah, Port Dickson.

The consortium known as the Jimah East Power Sdn Bhd (JEP) that is co-owned by 1MDB and Mitsui Corporation Limited was awarded the project on June 3, 2014.

“The instability of the exchange rate and interest rate has resulted in significant reductions in project returns and shares.

“Besides that, 1MDB has also informed that its Sukuk Murabahah project worth RM8.4 billion is now in a weakened state and will be a challenge to JEP to get funding for the 3B project to allow it to achieve financial close, said the written reply.

However, the government said that 1MDB is not letting go of the project and is instead trying to become a “lead player” in a consortium to commence the project, but did not elaborate further.

In response, DAP’s Petaling Jaya Utara MP Tony Pua warned that a delay would mean Malaysians would have to bear the costs of higher electricity prices, added with the fact that another power plant awarded to Malakoff is also facing delays.

“The only logical thing to do now is to cancel the above concessions and competitively tender the projects to companies which actually have the financial muscle to see through the projects,” Pua said.

1MDB reportedly has RM42 billion in liabilities and previously missed deadlines to pay off interests on its debts.

The state-owned strategic investment firm is currently the subject of an investigation by the Auditor General’s Department and in line for further scrutiny by Parliament’s Public Accounts Committee.