Highlight: MP questions acquisition of IPPs by 1MDB

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KUALA LUMPUR (July 11): Taiping MP Nga Kor Ming today questioned whether some of the recent acquisitions of independent power producers (IPPs) by the 1Malaysia Development Berhad (1MDB) are bailouts by the government using public funds. Pointing out that in the past year, 1MDB has spent RM12 billion acquiring three major IPPs, Nga questioned the large amount and the hurry to acquire them, seeing that some of their contracts were under review by the government and towards the expiry of the concession. The DAP rep also highlighted that in the latest acquisition announced last Friday, for Jimah Energy in Negeri Sembilan, it would be close to 100 years before the investment could be fully recovered. "1MDB is said to have offered RM1.2 billion to buy Jimah Teknik and Jimah O & M. However for the end of 2012, Jimah Teknik has negative RM367 million in reserves, meaning its total liability is more than its total assets. The company's profit after tax is only RM11.8 million. "The low profit and negative reserves show that the companies are highly leveraged and have a problem generating profit in the near future. This is contradictory to 1MDB's statement that Jimah has strong cash flows," he said to reporters at Parliament lobby. Nga also questioned if 1MDB had the skills, technologies and experiences in running power plants as it was a government arm set up to be "a strategic enabler for new ideas and a new source of growth for the country". 1MDB's mission is to drive long term sustainable economic development by forging strategic global partnerships and promoting foreign direct investment, he pointed out. He then called on the finance minister to give full disclosure of the spending and for the Public Accounts Committee to conduct hearings of the cases to safeguard the public’s interest. "It is of paramount importance that it is the government's duty to make such major acquisitions in an open and transparent manner, especially when the government is seeking approval from the House for another RM12.17 billion under the Supplementary Supply Bill," he concluded.