FRESH from being awarded an estimated RM11 bil contract involving a 2,000 megawatt coal-fired power plant project called Project 3B; despite a marginally higher bid at 25.65 sen per kWh as compared to its competitor at 25.23 sen per kWh; 1MDB is again being confirmed a 50 MW Solar Plant Project - albeit through direct tender this time.

The mega solar power plant being initiated by 1Malaysia Development Bhd (1MDB) has secured a tariff rate of somewhere between 40 sen to 46 sen per kWh. The rates are lower than existing tariff for electricity generated by solar plants. Electricity generated from non subsidized gas would cost around 35 sen. We could assume that the government’s strategy is to displace gas when subsidy withdrawals take place as part of the subsidy rationalization program.

However it cannot be determined if that is the best rate with present technology because it is learnt that it is a directly negotiated exercise. The planned 50MW solar farm to be built in Kedah will also become by far the largest in the country, especially if the 50 MW is proven to be merely a pilot, paving the way for a bigger scale solar panel project.

1MDB’s solar farm initiative will also encroach upon TNB’s space. Additionally, TNB’s wholly-owned subsidiary TNB Energy Services Sdn Bhd has been championing renewable energy, especially solar power, for years now. 1MDB’s foray into solar power will only crowd out TNB and other, smaller solar power players.

The government must immediately explain why it decided to embark on a direct tender exercise in the case involving 1MDB when SEDA has taken pains in the past to exercise open bidding through its transparent online open bidding systems for energy quota fixed between 1MW and 5 MW in 2012.

The government must also confirm the type of support provided to the project - whether through  transmission from solar plant to grid, bridging any gap on funding grants, to the lease for the estimated 500 acre land needed for the entire project. Will it be vis the usual Private Public
Partnership project?

We also deserve to know who is the technological partner or provider to 1MDB, to ascertain the extent of risk exposure for 1MDB - which is now considered a national treasure by the government. Without any guaranteed offtake, and having to compete against conventional fuels -the cost of the 50 MW solar plant project could cost up to RM900 million; despite photovoltaic prices being on a downward trend.

Does 1MDB even have the track record and in-house expertise needed to run solar power projects? And where will the estimated 300-500 acres required for the 50 MW solar plant be? Has the necessary Environmental Impact Assessment study been done to ascertain the impact of such a set up on residents in Kulim. To date, the largest solar farm in the world is Ivanpah - deeply situated in the US desert! A total of 371 MW sited on 3,700 acres of land. It would be most pertinent for the government to disclose an EIA in a project handed out to 1MDB in Kedah.

1MDB has been on a power hunt of late; beginning on the acquisition of over RM10 billion in power assets at inflated prices, which include the power assets of Tanjong, Jimah and Genting; to the recent successful bid of RM11 billion, 2,000MW coal-fired project; to the the blatant directly negotiated 50 MW solar panel powered project.

The government must explain the reasoning and the lengths taken to accommodate 1MDB’s power appetite, including a directly negotiated tender exercise despite the latter’s less than stellar standing in the financial world. Else, Malaysian consumers will be left bereft of any explanation as to how the government wheels and deals projects in this country.