DAP: Minister’s reply on 1MDB power assets debunks Najib’s claim

tony-pua-maximus-1mdbPETALING JAYA: Tony Pua is pleased that Energy, Green Technology and Water Minister Maximus Ongkili has confirmed his earlier assertion that 1MDB’s take over of independent power producers (IPPs) had not benefited the people in terms of electricity tariff.

The Petaling Jaya Utara MP was referring to the answer he received from the minister in the Dewan Rakyat to his question on why the electricity tariff had not gone down since 1MDB’s purchase of the IPPs.

Ongkili told the Dewan Rakyat that as part of 1MDB’s acquisition of Tanjong Energy Holdings Sdn Bhd (now known as Powertek Energy Sdn Bhd), Kuala Langat Power Plant (previously known as Genting Sanyen) and Jimah Power in 2012, the tariff rate had been maintained as finalised in the power purchase agreements (PPA).

“The change to electricity tariff has nothing to do with 1MDB’s acquisition of the IPPs,” he had said.

“In a blog post prior to the Budget 2018 announcement, Prime Minister Najib Razak had made the claim that 1MDB’s involvement in the renegotiation of lopsided PPAs had resulted in massive savings for Malaysians.

“Ongkili has now effectively clarified that Najib’s claims are completely ridiculous.

“Not only has the minister stated without doubt that 1MDB’s participation has had no effect on the tariff rates or energy costs, he added that the cost savings that Najib has accredited to 1MDB have nothing to do with them either,” Pua said in a statement.

The DAP national publicity secretary added that Ongkili had also clarified in his speech that the lower capacity rate financial (CRF) of RM6kw per month for 48 months, which resulted in RM1.6 billion in savings was a condition in the tender set by the Energy Commission.

“It was certainly not because of 1MDB’s noble generosity,” Pua said, adding however that the country should be grateful to Najib for admitting that IPPs were allowed to profit astronomically from lopsided deals that were signed in the early 1990s, when Dr Mahathir Mohamad was the prime minister.

“However, we can now also confirm that 1MDB has played no role to atone for the above injustice.”

Pua also highlighted that Malaysians did not enjoy a single sen in benefit as electricity tariffs had only increased and not decreased since 1MDB started acquiring these IPPs.

He also reiterated his comment on 1MDB’s RM12.1 billion misadventure in the power sector which resulted in multi-billion ringgit losses.

“1MDB made such a loss when it was forced to dispose of its entire energy interests to a China outfit for a mere RM9.83 billion.

“It is time for Najib to face the facts and deal with the billions of ringgit of losses and damage that 1MDB has caused to the tax-payers in our power sector, amongst other billions of ringgit of losses,” he said.

PPA tariff vs electricity tariff

Last month, 1MDB had responded to Pua’s claims about the electricity tariff not reducing by saying that the DAP man did not know the difference between the power purchase agreement (PPA) tariffs and electricity tariff for consumers.

1MDB said Pua had confused the PPA tariff with the electricity tariff, maintaining that it had indeed helped reduce the former.

“As Pua well knows, the PPA tariff is only one component of the electricity tariff, with other components being fuel costs, transmission and distribution costs, etc.

“It is a fact that 1MDB generated competition during PPA bidding for new power plants and renewal of PPA contracts for existing power plants.”

According to the fund, PPA tariffs for new and existing plants were reduced by between 1 and 2 sen per KW/H as a result of 1MDB’s participation.

“Based on an 85% capacity factor, a 1-sen tariff per KW/H reduction on a 2,000 MW power plant over 20 years can result in up to RM3 billion of cost savings over the life of a PPA, for one power plant.

“The savings are multiplied significantly across other PPAs. This in turn lowers the overall PPA tariff cost to Tenaga Nasional Bhd, which is the sole buyer under all PPAs, and contributes towards the electricity tariff.”

Tony Pua wrong about our finances, says 1MDB