KUALA LUMPUR (Mar 28): Selling off 1Malaysia Development Berhad's (1MDB) power asset will not be sufficient to rescue the debt-ridden strategic investment vehicle from its chronic cash-flow problems, DAP said today.

DAP national publicity director Tony Pua said the sale would be killing the only "goose which lays eggs", adding that the move would only partially reduce 1MDB's staggering RM42 billion debt burden.

"Unfortunately, the desperate asset-stripping attempt, just like the IPO (initial public offering), will be far from sufficient to rescue 1MDB from its chronic cash-flow problems," he said in a statement today.

"1MDB’s energy assets, although overpriced, are, unfortunately, the only assets which generate revenue and profit-making. Once disposed of, there will nothing left which generates revenue and profits to repay the balance of the RM30 billion besides its RM7.1 billion of real estate."

This comes after CIMB Group announced on Thursday that Putrajaya has appointed it to act as adviser to the Ministry of Finance (MoF) for the potential sale of 1MDB's energy arm, Edra Global Energy Berhad (Edra), to strategic investors.

CIMB said its role included identifying potential buyers and running a competitive process for Edra to derive an optimal outcome for MoF.

"This appointment does not extend to any other areas relating to the 1MDB Group," it said in a statement.

On Wednesday, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said the government had asked CIMB Group, as a "third party", to perform an evaluation of 1MDB, which is Prime Minister Datuk Seri Najib Razak's brainchild, for the IPO of its power assets.

"So we will also look at how much 1MDB can be valued at, how to use the land that it has, and joint ventures and more, which we believe, will solve 1MDB's cash-flow problems," he had said in Parliament.

Pua today accused Husni of misleading Parliament with his statement, saying the minister had not clarified that CIMB had been appointed to sell off 1MDB's power assets.

"Instead of being honest by informing the house that CIMB has been appointed to dispose of 1MDB’s energy assets at the best possible prices, he claimed that CIMB was appointed to provide a third-party valuation of 1MDB’s energy arm strictly for the purposes of the IPO," he added.

The decision to sell off 1MDB's power assets, the Petaling Jaya Utara MP said, also implied that the controversial fund has abandoned its original plan to raise funds via an IPO of Edra Global.

"No company with any confidence with its own business and financial valuation to raise funds via an IPO would concurrently appoint another investment bank to conduct an auction for its assets.

"The proposed IPO of Edra Global has already been postponed multiple times since the middle of last year due to its inability to secure a reasonable valuation relative to the price and cost 1MDB had paid for its energy assets," he said.

Husni had previously said that that 1MDB's cash-flow woes would be resolved once the IPO takes off, expected in the second quarter of this year for its power plant assets.

However, critics of the strategic investment fund, including Pua, have said that the IPO was not enough to solve 1MDB's cash-flow problems, as the exercise would barely raise RM18 billion against its RM42 billion debt.

Pua also said that 1MDB had spent a total of RM12.1 billion to acquire three power companies, including Tanjong Energy Holdings, Genting Sanyen and Jimah Ventures, which are now valued at only RM10.9 billion.

"To acquire these companies, 1MDB had borrowed a whopping RMRM20.9 billion (based on current exchange rates). In short, 1MDB took RM20.9 billion of loans to acquire its power assets worth only approximately RM10.9 billion.

"Hence 1MDB has been desperate to list its energy subsidiary in order to pare down these excessive loans.”