KUALA LUMPUR: YTL Power International Bhd’s bid for the power plant, Project 3B, was disqualified on technical grounds. However, all of the bidders, including 1Malaysia Development Bhd (1MDB), failed to meet the technical requirement, according to a document seen by The Edge Financial Daily.
In a statement last Friday the Energy Commission (EC) said YTL Power’s bid, which utilises South Korea’s Doosan Heavy Industries & Construction steam generators, was rejected because the “operating track record for Doosan steam generators is only proven for steam conditions up to 569°C/596°C [input/output temperature] and not 603°C/613°C as proposed in the bidding document.
The difference between the proposed temperature against Doosan’s track record prompted the EC’s concern whether the South Korean boilermaker could build a generator that can generate steam at above 600°C.
This would have required “a significant improvement in material specifications over their existing technology”, said the EC in explaining why 1MDB won the RM11 billion 3B project.
“It would have been a non-issue had the YTL-SIPP Consortium selected the Doosan steam generator [boiler] with steam conditions of 569°C/596°C [maximum], which are similar to the specifications of the Doosan steam generators in operation in [South] Korea,” said the EC.
However, technical evaluation documents of the tenders seen by The Edge Financial Daily show that all four bidders had proposed boilers with temperatures that were higher than track records.
It is common for boilermakers to propose boilers with incrementally higher temperatures as the technology available improves and higher temperatures increase the efficiency of the boilers, one industry player explained, “You can’t expect to keep using the same technology to build power plants.”
It was noticed that the 17°C difference in temperature proposed by YTL Power was the highest among the bidders. 1MDB, Malakoff Corp Bhd and Tenaga Nasional Bhd (TNB) had proposed boilers that were 2°C, 2°C and 13°C higher than their respective reference plants.
However, Doosan’s output boiler temperature of 613°C was in line with the proposals of the other bidders.
According to industry sources, Doosan, in its presentation to the EC, had shown that it is currently erecting a 2x1,000mw boiler in Shinporyung, South Korea with temperatures of 613°C/624°C.
“Doosan is already building a 1,000mw boiler in South Korea that exceeds the specifications of the [Project 3B] bid. If it is good enough for the Koreans, why can’t it be for the Malaysians?” said the industry player.
In fact, the EC in its statement last Friday acknowledged that its own technical committee had approved Doosan’s boiler.
However, the EC’s board overturned the decision.
The decision is an expensive one for stakeholders like the Malaysian public and TNB, which will have to bear the higher cost directly and indirectly. 1MDB’s adjusted level tariff of 25.65 sen per kWh was 0.42 sen higher than YTL Power’s bid and the difference works out to RM1.6 billion for the 25-year concession.
At the same time, 1MDB’s Japanese boilermaker, IHI, does not have a pristine track record in Malaysia. All three boilers that it has supplied to Malakoff’s 2,100mw Tanjung Bin coal-fired plant have been wracked with problems, resulting in unscheduled shutdowns.
1MDB’s coal-fired Jimah Power Station, which uses IHI boilers also encountered the same problem last year, resulting of an unscheduled shutdown in one of its two 700mw blocks for several weeks.
This article first appeared in The Edge Financial Daily, on March 12, 2014.