KUALA LUMPUR: Nga Kor Ming (DAP-Taiping) questioned whether some of the recent acquisitions of independent power producers (IPPs) by 1Malaysia Development Bhd (1MDB) were government bailouts using public funds.
Pointing out that in the past year 1MDB has spent RM12 billion acquiring three major IPPs, Nga questioned the large amount involved and the hurry to acquire the plants, since some of the contracts were under review and the concessions were close to expiry.
The DAP leader also noted that in the latest acquisition announced last Friday, involving Jimah Energy in Negeri Sembilan, it would be close to 100 years before the investment is fully recovered.
“1MDB is said to have offered RM1.2 billion to buy Jimah Teknik and Jimah O&M. However, as at end-2012, Jimah Teknik had negative RM367 million in its reserves, meaning its total liabilities are 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 will have a problem generating a profit in the near future. This is contradictory to 1MDB's statement that Jimah has strong cash flow," he told reporters at the lobby of Parliament House.
Nga also questioned whether 1MDB has the skills, technology and experience to run power plants as it is 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 to safeguard public 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 said.
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This article first appeared in The Edge Financial Daily, on July 12, 2013.