KUALA LUMPUR (July 5): The Ministry of Energy, Green Technology and Water (KeTTHA) said YTL Power International Bhd has yet to sign its power purchase agreement (PPA) with Tenaga Nasional Bhd (TNB), due to conditions precedent set by TNB in the agreement.

In a statement today, the ministry also confirmed that TNB is challenging the direction issued by the Energy Commission (EC) to extend the PPA with YTL Power, with TNB submitting the direction for judicial review.

The statement was issued following TNB's announcement yesterday that the utility giant was seeking a judicial review of the directions issued by the EC and KeTTHA minister, in relation to a PPA that it is negotiating with YTL Power Generation Sdn Bhd, YTL Power's wholly owned subsidiary.

TNB said its move was in relation to a direction dated April 7 that was issued by the EC to TNB, which compelled TNB, among others, "to remove the incorporation of conditions precedent required by TNB" in the proposed new PPA with YTL Power.

"The direction was made pursuant to the minister's direction to ST (EC) on April 1, 2016," said TNB.

Via the judicial review, it was seeking a written order from the court to quash the EC's direction, as well as the minister's direction, and a declaration that both their directions were ultra vires, or beyond the issuer's legal power or authority, as provided under the Electricity Supply Act 1990 (ESA) and the Energy Commission Act 2001.

Failure to comply with the EC's direction is a punishable offence under Section 50E of the ESA, which could result in TNB being fined not more than RM200,000 or jailed for no more than two years, or both.

As such, TNB also said it wanted the EC's direction be stayed "pending the hearing and determination of the judicial review proceedings on its merits".

To recap, the government, via the EC, had conducted a competitive bidding exercise in 2015 to procure additional power supply on a short-term basis by extending the PPA of the first generation independent power poducers.

Port Dickson Power Bhd, Kuala Langat Power Plant Sdn Bhd and YTL Power Generation were selected, following the fulfilment of conditions set by the EC.

YTL Power was awarded an extension for two years plus 10 months for the 800MW power plant in Paka in October last year following an open tender process.

However, the PPA has yet to be signed eight months after the extension was granted and there was a land dispute between TNB and YTL Power. The land for the Paka plant is owned by TNB, but leased to YTL Power under the terms of the original PPA.

It was previously reported that TNB declined to sign the PPA unless YTL Power entered into a new land lease agreement (LLA). YTL Power, however, asserts that the existing LLA only expires at end-2018 and does not require an extension.