KUALA LUMPUR: Opposition lawmakers want the Energy, Green Technology and Water Ministry to terminate and penalise independent power producers (IPPs), namely 1Malaysia Development Bhd (1MDB) and Malakoff Corp Bhd, for failing to finance and deliver their concessions.

“Why are new IPP contracts awarded to 1MDB and Malakoff which have failed to commence their respective projects due to financial difficulties?” asked Petaling Jaya Utara MP Tony Pua at the Parliament lobby yesterday.

Pua was commenting on the response from Minister Datuk Seri Dr Maximus Ongkili that both companies had obtained official support from financial institutions to prove their financial capacities to undertake these projects.

Pua said the response from the minister was highly unsatisfactory because both power plant projects were “severely delayed and will run into hundreds of millions of ringgit”.

Every year’s delay to the completion of each of the power plant projects would cost Malaysian consumers RM644 million in higher electricity prices, he said.

Malakoff’s 1000mw Tanjung Bin coal power plant is scheduled to be completed by March 2016, but is reportedly expecting a six-12 months’ delay.

1MDB, which has been awarded the 2000mw coal-fired power plant (Project 3B) as well as the Project 4A gas-turbine power plant in Malacca, had not started work on the projects due to shortage of funds.

Moreover, the award of the power plant concession contracts to 1MDB has become an even more expensive exercise, stating that Project 3B was awarded to 1MDB despite 1MDB not submitting the lowest tariff rate, said Pua.  Project 4, on the other hand, was awarded directly without any tender at all, he also pointed out.

“Why should we allow 1MDB to profit from a contract that it is unable to deliver via a licence granted by the government when it is now trying to be a lead player in a consortium of companies?”The consortium that is undertaking Project 3B, known as the Jimah East Power Sdn Bhd (JEP), is 70:30 owned by 1MDB and Mitsui Corp Ltd.

Pua also asked if the immense burden on Malaysians is justified just to bail out the heavily-indebted 1MDB.

Serdang MP Dr Ong Kian Ming, who was also present at the press conference, asked if  Project 3B would be given to Tenaga Nasional Bhd, given 1MDB’s failure to raise the necessary financing for the project.

This article first appeared in The Edge Financial Daily, on March 26, 2015.