‘Delayed power projects will lead to energy crisis’

-A +A

KUALA LUMPUR: The Energy, Green Technology and Water Ministry and the Energy Commission must be held responsible for the delay in building several power plants, a DAP lawmaker said, adding that the country could face an energy crisis by 2018 due to the setback.

Serdang member of parliament Dr Ong Kian Ming said Project 4A, “a much-needed power plant”, will most likely be delayed as the commission rejected the proposed tariff by the SIPP Energy Sdn Bhd-Tenaga Nasional Bhd (TNB) consortium, which had been awarded the contract through direct negotiation.

“The original decision to award Project 4A through direct negotiation is now coming back to haunt the commission and the ministry. The commission should have opened up the bidding for Project 4A for a competitive tender, so that the most experienced party with the lowest price would have received this contract,” he said in a statement yesterday.

“What we are left with is yet another delay in the construction of a much-needed power plant that may push our country towards an electricity crisis in three years’ time or less.”

Ong said an energy shortage is imminent given the setback in Project 4A, coupled with the likely delay of 1Malaysia Development Bhd’s (1MDB) Project 3B power plants because of its inability to raise funds to kick-start the projects.

“With our actual operating reserve touching a mere 9% in the peak demand period of June 2014, it is a distinct possibility that we will be facing an electricity crisis by 2018,” he added. 

The Edge weekly reported last week that SIPP is seeking a new partner for Project 4A, following the commission’s rejection of its proposal. But there had been no takers.

The project was awarded by the commission to a consortium of companies led by SIPP, together with YTL Power and TNB, on May 31, 2014. 

The project is to build a new 1000mw to 1400mw combined cycle gas turbine (CCGT) power plant in Johor, which is due to be operational by June 2018.

“The commission as well as the ministry justified the fast-tracking of this project without a competitive tender because of the impending energy crisis which the country will face by 2018 as reserve margins continue to fall.

“This project has been criticised from the beginning not just because of the lack of an open tender, but also the fact that SIPP has no prior track record in the building of power plants. YTL [Power] pulled out of this deal on June 19, 2014, leaving SIPP and TNB as the two remaining partners,” he said.

SIPP and TNB submitted a bid of 39 sen per kWh for the proposed power plant, which is 12% higher than the TNB CCGT power plant in Perai, Penang, which recently began operations.

The Penang project, Ong said, was awarded through an open tender, which is why its tariff is lower.

“What is supposed to have been a fast-track project to build a CCGT power plant that will be up and running by June 1, 2018, (before 1MDB’s Project 3B that is due in November 2018 for the first 1000MW and November 2019 for the second 1000MW) will now almost certainly be delayed,” he added. — The Malaysian Insider


This article first appeared in The Edge Financial Daily, on June 24, 2015.