KUALA LUMPUR (Oct 26): Embattled state investment fund 1Malaysia Development Bhd (1MDB) has asked DAP lawmaker Tony Pua to stop "misleading the public" with his statements over the fund's affairs.
Referring to a press statement issued by Pua yesterday, who is DAP national publicity and MP for Petaling Jaya Utara, 1MDB today said that in claiming that 1MDB is currently an "empty shell" holding "RM40 billion" of debt, Pua had omitted to highlight that it was the Public Accounts Committee (PAC), of which he is a member, that recommended for the vast majority of 1MDB assets to be transferred from 1MDB, to Minister of Finance Inc (MOF Inc).
In consideration of the transfer of payments for the Tun Razak Exchange, Bandar Malaysia and Pulau Indah land and Air Itam land projects, 1MDB said it will receive payments over time.
"Those payments, along with asset monetisation proceeds, will be used to meet the principal and interest on the remaining obligations of 1MDB, which primarily comprise long-term bond and sukuk debt, totalling approximately RM32.5 billion at present exchange rates and not the RM40 billion figure wrongly quoted by Pua," it added.
In response to Pua's question on how 1MDB was "on track to realise profit", the state investment fund referred the former to the PAC's report.
"The information on page 80 was presented to the PAC (of which Pua is a member) and provides details of projected future cash-flows relating to the 1MDB rationalisation programme, which shows a surplus of approximately RM3 billion being generated over time," it said.
"The underlying and conservative assumptions behind the projected cash-flows are described on page 8 [of the PAC report]. Accordingly, with appropriate stewardship and competent development of the real estate under MOF Inc and monetisation of other assets, it is highly likely that over time, there will be a surplus generated, whether at the 1MDB level or at the level of its 100% shareholder, MOF Inc," it added.
It added that Pua "purposely misleads the public" by stating that 1MDB's RM12.1 billion investments in the power sector resulted in billions of ringgit in losses but adds that 1MDB disposed of its energy interest to General Nuclear Power Corp (CGN) for RM9.3 billion.
"Not only are the figures quoted by Pua completely wrong, he conveniently fails to mention that, whilst the gross purchase consideration was RM12.05 billion, the companies acquired had RM1.63 billion of cash on balance sheet, which resulted in a net purchase consideration of approximately RM10.42 billion," it added.
"Furthermore, over the period of ownership, approximately RM2.18 billion was generated in dividends, which were largely used to pay interest on the acquisition debt. Accordingly, when the cash, dividends and other costs/impairments are taken into account, upon the sale to CGN at RM9.83 billion cash (not RM9.3 billion as wrongly claimed by YB Tony), 1MDB achieved near 'break even' on its energy investment," 1MDB said.
It, however, noted that the final figures are subject to audit confirmation.
1MDB added that Pua alleged the investment fund did not help solve the problem of power purchase agreements (PPAs) that were overly generous to independent power producers (IPPs), as he claimed there were no reductions in electricity tariffs.
"Pua however confuses the PPA tariff (which 1MDB helped to reduce) with the electricity tariff," it said, adding that Pua is aware that the PPA tariff is only one component of the electricity tariff, with other components being fuel costs, transmission and distribution costs, among others.
"It is a fact that 1MDB generated competition during PPA bidding for new power plants and renewal of PPA contracts for existing power plants," 1MDB said.
1MDB added that as a result of its participation, the new plant and existing plant PPA tariffs were reduced by between 1-2 sen per kilowatt per hour (KW/H) and it was the lowest bidder in all tenders that it won.
"Based on an 85% capacity factor, a 1 sen tariff per KW/H reduction on a 2000 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," it said.
It added that the savings are multiplied significantly across other PPAs which lowers the overall PPA tariff cost to Tenaga Nasional Bhd, which is the sole buyer under all PPAs, and contributes towards the electricity tariff.
"Pua should stop misleading the rakyat, and accept that the opposition's unpatriotic economic sabotage of 1MDB for their own political gain has failed," 1MDB added.