Withdraw 1MDB's Jimah East award and call for fresh bid, Awer told Putrajaya

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KUALA LUMPUR (Dec 17): The Association of Water and Energy Research Malaysia (Awer) has called on Putrajaya to call for fresh bidding on the RM11 billion Jimah East Coast Power Plant, which was awarded to sovereign wealth fund, 1Malaysia Development Bhd (1MDB) in a controversial open tender.

Its urgings came after 1MDB applied for a six-moth extension for the completion of the two-unit 2,000MW coal power plant recently (first unit was scheduled to be completed on Nov 15, 2018; second unit: May 15, 2019), not even a year after the project was first awarded in February, which Awer terms is a mark of "sheer incompetency". 

"What went wrong? Once a project is awarded, the winner of the bid has responsibility to deliver the project in time," said Awer president S Piarapakaran in a statement today.

It said that Jimah East is still in its early stages and hence the government should cancel the award to 1MDB and call for a new competitive bidding for the project, which was formerly known as Project 3B.

He said construction of a coal power plant takes around four years, while a combined-cycle gas turbine (CCGT) power plant takes only 32-36 months.

"A new open bidding should be called to build a CCGT power plant and not a coal power plant to prevent electricity supply security breach in 2018 and 2019. If the bid is called next January and the Notice to Proceed (NTP) is given by end of December, there is sufficient time to complete the 2,000 MW CCGT power plant project in time," he said.

Alternatively, he said Putrajaya can make 1MDB bear all additional fuel cost and capacity charges that will be incurred, due to the delays in the construction of the plant, should the extension be granted.

If not, then Putrajaya should make the Cabinet and the top officials in the Ministry of Energy, Green Technology and Water (KeTTHA) and the Energy Commission (EC) pay for the additional costs that would be incurred due to the delay of Jimah East, he said.
 
The government has imposed a penalty cap of RM108 million for every 1000mw for the delay in the construction of the plants but Awer had previously said there will be additional cost due to the delay, which it feared will be translated into a tariff hike that will directly impact consumers.

"[So] the additional cost that will be incurred after deducting the penalty (RM 108 million per 1000 MW) should be paid by members of cabinet, minister and senior officials in KeTTHA, as well as the chairman, commissioners and senior officials of EC. Do not pass any additional cost to members of public and businesses via electricity tariff," he stressed.

Piarapakaran's suggestions came after a study by National Energy Security Survey (NESS) to establish baseline data on energy-related issues showed that 60.09% of Malaysians opined that the government protects independent power producers (IPPs). The survey also revealed that 66.47% of Malaysians believe that the main responsibility of the government is to keep electricity tariff low. 

Besides Jimah East, Malakoff Corp Bhd's 1,000 MW Tanjung Bin Coal power plant - which was scheduled to be completed by March 2016 - is also seeking for six-12 months' extension. Piarapakaran said the additional fuel cost that will be passed to tariff for a six-month delay is about RM321.97 million, and for a one-year delay is around RM 643.94 million.