Govt must explain solar plant award to 1MDB

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KUALA LUMPUR: PKR vice-president Nurul Izzah Anwar has called on the government to explain why it decided to embark on a direct tender exercise in awarding the 50MW solar plant project in Kedah to government-linked 1Malaysia Development Bhd (1MDB), which could cost up to RM900 million to build.

“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,” she told reporters at Parliament yesterday.

“Without any guaranteed off take, and having to compete against conventional fuels, the cost of the 50MW solar plant project could cost up to RM900 million, despite photovoltaic prices being on a downward trend,” she said.

Nurul Izzah, who is member of parliament for Lembah Pantai, pointed out that the solar power plant being initiated by 1MDB has secured a tariff rate of between 40 sen and 46 sen per kWh.

“The rates are lower than the existing tariff for electricity generated by solar plants. Electricity generated from non-subsidised gas would cost around 35 sen. We could assume the government’s strategy is to displace gas when subsidy withdrawals take place as part of the subsidy rationalisation programme,” she said.

The award of the solar plant project comes on the heels of 1MDB clinching an RM11 billion contract involving a 2,000MW coal-fired power plant project called Project 3B by the Energy Commission, despite a marginally higher bid at 25.65 sen per kWh compared with its competitor at 25.23 sen per kWh.

Nurul Izzah said 1MDB’s foray into solar power would also crowd out Tenaga Nasional Bhd and other smaller solar power players in the field. “The government must immediately explain why it decided to embark on a direct tender exercise in the case involving 1MDB when the Sustainable Energy Development Authority has taken pains in the past to exercise open bidding through its transparent online open bidding systems for energy quota fixed between 1MW and 5MW in 2012.

“The government must also confirm the type of support provided to the project,” she added.

This article first appeared in The Edge Financial Daily, on April 8, 2014.