The power plant projects awarded by the government to 1Malaysia Development Berhad (1MDB) could result in an electricity tariff hike, warned DAP Petaling Jaya Utara MP Tony Pua.

Pua said that the government had granted three power plant projects to 1MDB to assist the national sovereignty fund to clear its RM42 billion debt.

This include the RM11 billion 2,000MW coal-fired power plant, also known as Project 3B in Negeri Sembilan, a 50MW solar power plant in Kedah and a 2,000MW gas-turbined plant in Malacca.

Pua said that it was reported that the government will award another two power plant projects in Sabah to 1MDB, namely the 400MW gas-turbine power plant in Lahad Datu or Sandakan, and a 780MW hydro plant in Ulu Padas.

Given this, he said that the government would raise the electricity tariffs in the name of subsidy reduction after 1MDB has sold the electricity generated by the power plants to TNB for a higher price.

“I can tell you, the electricity rate will go up in the future. They may say 'we have got no money to subsidise you' (but) the real reason is that they are awarding higher tariff rates to 1MDB,” said Pua.

Pua was speaking alongside PKR Pandan MP Rafiziz Ramli to a full house of more than 400 people at a forum on 1MDB last night.

The forum was jointly hosted by the National Oversights and Whistleblowers Centre and Centre to Combat Corruption and Cronyism.

The organisers had extended the invitation to former prime minister Dr Mahathir Mohamed, Deputy Finance Minister Ahmad Maslan as well as 1MDB CEO Hazem Abd Rahman, but none of the trio attended the event.

Not the lowest bidder

Pua, who also the DAP national publicity secretary, said although 1MDB won the 3B Project through open tender, it was not the lowest bidder.

He added that the government had given the power plant project in Malacca to 1MDB before the tariff was finalised and it showed that the government was desperate in trying to solve 1MDB's debt problem.

Pua described that 1MDB is “digging a hole to cover another bigger hole” as it was raising money to pay for another debt.

He said that once the company collapses, it would caused a domino effect which will spiral the country into another massive economy crisis.

He did not exclude the possibility that the government may lease the company in order to clear the debt.

“So they want to create this value of this company, get RM80 billion to cover up some of these debts for a while and make them last for another two or three years, and worry about the future later,” he added.

1MDB may trigger a run on gov’t guarantee

Rafizi said that 1MBD alone would not cause bankruptcy for the country but it might trigger a run on government's commitment to service its debt.

He said that while the debt remained to be collected by National Higher Education Fund Corporation (PTPTN) will balloon to over RM100 billion in 2020 or 2022, the national debt is currently over RM560 billion.

“1MDB on its own may not be that dangerous, but 1MDB may trigger a run when everyone starts demanding.

“That's like a run on a bank, when people start thinking that bank does not have the money, people start going and withdrawing everything at the same time, then we have trouble,” said Rafizi ( right ).

The PKR vice-president cum secretary-general warned that should the creditors lose confidence on Malaysia, the country may face problem in the future when it comes to future raising debts.

“If the creditors begin to lose confidence, it will affect your current financial commitment and also your ability to continue to raise debts for the future commitment. It’s going to be more expensive and so on.

“That may trigger the kind of problem that Argentina has, maybe not as extreme as Greece, but there have been countries in the past in a similar situation like Malaysia, where they have to go back to the creditor and re-negotiate,” he said.

Rafizi added that even the creditors eventually agreed to extend the payment but the exchange would be at a higher price.

“And when that happens, it will be at expense of the public. No schools, less development, pay cuts, and all these things. Ultimately, the public will suffer,” he warned.

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