FEW may realise that Minister of Energy, Green Technology and Water Datuk Seri Maximus Johnity Ongkili (picture) will have a big say on the value of Edra Global Energy Bhd, 1Malaysia Development Bhd’s (1MDB) energy unit, which is up for sale.

According to industry sources, 1MDB is trying hard to retain Project 4B after it had to let go of Project 3B. Also, it is bidding to extend the power purchase agreement (PPA) for Teluk Gong 1 Power Station, which expires in January next year, barely six months from now.

Both these crucial decisions now fall to Ongkili, Kota Marudu MP and deputy president of the United Sabah Party.

Project 4B alone is worth an estimated RM1.7 billion to RM2.4 billion in equity value to Edra, for the purpose of selling the energy unit. This is a big boost, given that Edra has an estimated equity value of RM3 billion to RM5 billion, against debts of RM11.5 billion.

With the trade sale of Edra underway, 1MDB cannot afford to lose Project 4B. That said, the state-owned investment fund did not really pay anything to secure the project in the first place.

Recall that Project 4B, a 2,400mw combined cycle gas turbine (CCGT) power plant project with a commercial operation date in 2021, was awarded to 1MDB on a direct basis last year. The proposed plant would have been located on Powertek’s (formerly Tanjong Power) land in Melaka.

However, according to industry sources, the Energy Commission (EC) has decided to withdraw the award from 1MDB because of its failure to execute Project 3B on a timely basis. Project 3B is a 2,000mw coal-fired power plant project that had to be sold to Tenaga because it did not have enough capital to undertake the project.

In fact, 1MDB wasn’t even able to complete the financial close of the project. On that basis, the EC has decided to retender Project 4B, say sources.

The final decision, however, rests with Ongkili as minister in charge of energy.

He also will have to decide on the extension of Edra’s 440mw open-cycle gas turbine power plant, Teluk Gong 1 Power Station (see table).

Recall that the EC had run a tender process for the extension of PPAs that are about to expire. Other competitors for the extension are YTL Power International Bhd and Tenaga Nasional Bhd. This means that Edra cannot take it for granted that an extension will be given.

Both YTL Power’s 780mw CCGT power plant in Paka, Terengganu, and Edra’s Teluk Gong 1 Power Station have been reported to be the front-runners in the tender. Sources say the EC has decided to extend these PPAs. Again, the final decision rests with Ongkili.

For Edra, the extension could be worth several hundred million ringgit, depending on the tariff — not something 1MDB can afford to pass up at this juncture.

While it remains to be seen what Ongkili’s decisions will be, some quarters note that the handling of Project 3B could give some indication.

Edra has yet to be penalised for its failure to execute Project 3B. The group’s liability is relatively small — a RM30 million performance bond. Sources say the EC has already made up its mind that the bond should be cashed in.

Again, this is another decision Ongkili has to make, and at the time of writing, he had yet to make a call.