Tuesday, February 18, 2014

Energy Commission Awards Power Plant Project To 1MDB Instead Of Lowest Qualified Bidder

The Cabinet must prioritise the interest of the rakyat and not the profits of its
companies when deciding on the “winner” of the power plant projects.

It has been reported by The Edge Financial Daily over the past 2 weeks that the Energy
Commission has decided to award the latest 2,000MW coal-fired power plant to 1Malaysia
Development Bhd (1MDB).

The paper reported that “according to industry sources, the board of the Energy Commission (EC)
has decided to propose 1MDB as the preferred bidder for the RM11 billion planting­up exercise to
the Ministry of Energy, Green Technology and Water”.

This is despite the fact that the bid submitted by 1MDB at 25.65 sen per kWh is higher than that
submitted by another tenderer, YTL Power at 25.23 sen per kWh. The difference of 0.42 sen per
kWh is estimated to constitute a difference of RM2 billion over the 25 year concession period.
What is more disturbing is the fact that based on documents sighted by The Edge, “the EC’s
technical evaluation committee had recommended YTL Power as the preferred bidder for the
tender in December last year”.




The Cabinet must not make a mockery of the international tender exercise for the above power
project codenamed “Project 3B”. By selecting a bid which is higher than the lowest qualified bid,
the Malaysian government will be signalling to the entire world that any tender exercise
conducted will favour only certain connected parties such as 1MDB, whereas the real “winners” of
the tenders are doomed to fail.

The Cabinet must acknowledge that the strength of future open tenders in Malaysia will be highly
dependent on the confidence of the participants in the system. If the global contenders lose
faith in a level playing field as promised by the Najib administration, then Malaysia will not be able
to attract the best quality and value contractors for our projects, resulting in a loss of
competitiveness.

What is perhaps most important and immediate for the Cabinet to consider is also the impact on
ordinary Malaysians as a result of such an unfair decision to award to a bidder at a higher price.
The higher cost of electricity payable to 1MDB by Tenaga Nasional will naturally result in a higher
cost of electricity for both the industry and ordinary Malaysians. At a time when the Government
is cutting subsidies and claims that it is doing all it can to keep cost as low as possible, it will be a
clear betrayal to the man-on-the-street if it chooses higher electricity prices.

The Cabinet can be assured that if the higher bid is selected, the DAP and Pakatan Rakyat will
ensure that all Malaysians discover that the Prime Minister Dato’ Seri Najib Razak and his cabinet
are completely insincere in wanting lower costs for the rakyat, and is only keen to prioritize the
profits of those connected to the administration.
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