The government has been urged not to approve Tenaga Nasional Bhd’s (TNB) takeover of 1Malaysia Development Bhd’s (1MDB) coal-fired power plant if it will mean higher electricity tariffs.

Petaling Jaya Utara MP Tony Pua in a statement today expressed concern over TNB CEO Azman Mohd’s statement on May 12 that TNB intends to seek a tariff increase to cover the purchase of the 2000MW coal-fired power plant known as Project 3B.

Pua said Azman’s claim that TNB will not pay a premium for the acquisition of the majority share in the project was good news for the public as it means TNB does not intend to bailout the 1MDB project.

“However, we are also concerned that Azman Mohd will be seeking ‘a revision in the tariff’ in the event TNB takes over, claiming that the project may not otherwise ‘be commercially viable’.

“As the project was awarded via an open tender, the Energy Commission (EC) must not approve any transfer in the rights of the power plant concession if it will involve any changes in the tariff agreed. 

“Such a revision will make a complete mockery of the ‘open tender’ exercise to seek the lowest possible tariffs among qualified bidders,” said Pua.

The project awarded to 1MDB was stillborn due to the government investment firm’s financial woes .

Last month it was reported that TNB was eyeing the project, and Minister of Energy, Green Technology and Water Maximus Ongkili reportedly confirmed on May 12 that discussions for the power company to acquire the biggest equity in Project 3B are under way.

‘Re-open tender, penalise 1MDB’

Pua said if the TNB takeover will result in higher tariffs or if it eventually needs to pay a premium, the commission must “reject the transfer, terminate the concession and re-open a new tender exercise for the power plant”.

“In fact, the TNB CEO rightly pointed out that the EC ‘can take it back and do a rebidding. It is up to the government to decide’.

“Hence, to protect the independence, integrity and good governance of the government and the regulating authority, the EC must immediately prepare to call for a new open tender exercise for the Project 3B to ensure that the power producer with the lowest possible tariffs are given the right to carry out the project.

“Otherwise, ordinary Malaysians will be faced with the inevitable burden of having to pay for higher electricity costs,” he said.

Furthermore, the MP said the government should also penalise 1MDB for failure to fulfil its end of the deal that he claimed was won in an allegedly “controversial” manner after another consortium led by YTL Power was disqualified at the last minute.

However, noted Pua, 1MDB has failed to secure the necessary funding to finance the RM11 billion project leading to at least eight months’ delay.

“The EC must financially penalise 1MDB for failing to fulfil their obligations in the concession contract and jeopardising Malaysia’s energy cost and security,” said the DAP parliamentarian.