Malaysians will have no choice but to pay more for electricity in order to bail out debt-ridden company 1Malaysia Development Bhd (1MDB).

Petaling Jaya Utara MP Tony Pua said this is because 1MDB was awarded several "lucrative" independent power producer (IPP) concessions without any open tender.

"Such direct awards went directly against the publicly stated principles of the Energy Commission to adopt open tender practices in order to promote competition in the industry," Pua ( right ) said in a statement.

The contracts included a 2,400MW combined-cycle gas-turbine power plant and a 50MW solar farm, both awarded last year.

In addition, 1MDB was also awarded a 2,000MW coal-fired power plant in February, after the lowest tariff bid by YTL Power was controversially disqualified on a technicality, said Pua.

"I had argued that the tariff wil be higher for Malaysians in the future because the government will award 1MDB with more lucrative tariffs in order to create more profits for the distressed firm to pay off its RM42 billion of monstrous debt.  

"Otherwise, why would the government eschew the open tender process if 1MDB would offer the lowest possible tariff in the first place?" asked Pua.

The DAP parliamentarian added that the situation was even worse than what he had initially anticipated, because the government had agreed to raise the tariff rates for 1MDB power plants even before their construction had even commenced.

Tariff increase approved

The Edge Financial Daily had reported that the Energy Commission had approved an increase in tariff for the solar power plant from 41 sen per kWh to 50 sen per kWh.  

"That represents a whopping 22 percent hike in electricity tariffs within a year after the project has been awarded via direct negotiations. The power supply will be sold to Tenaga Nasional, which will in turn transfer the cost burden to consumers."

Pua also pointed out how his party colleague, Serdang MP Ong Kian Ming ( left ), had said that the 50 sen tariff rate is higher than the 49 sen recently awarded to smaller solar plants sized between 10MW to 30MW via competitive bidding.  

"As he rightly pointed out, the substantially larger 50MW solar farm will naturally enjoy higher economies of scale to offer cheaper prices.  

"In addition, with the rapidly plummeting global solar photovoltaic panel prices, tariffs should be declining over time, and not be increased by a whopping 22 percent," said Pua.

He also said that the commission is allowing 1MDB to profit from the license award by on-selling its rights to Tenaga Nasional Bhd (TNB) instead of cancelling the award due to breach of concession terms.

"To sweeten the deal for TNB to acquire the concession from 1MDB, it is understood that TNB will be allowed to renegotiate the tariff which was set earlier during the bid.  

"Once again, it means higher profits for 1MDB for doing absolutely nothing other than to on-sell the concession, while the rakyat will have to pay for higher electricity rates to TNB."

Pua said if the government was truly concerned with the interest of the ordinary man, then the right thing to do would be to cancel all of the above recently awarded power plant concessions to 1MDB.

"However, the government chose to artificially improve the profitability of 1MDB in order to cover up the billions of ringgit of losses suffered by the company.  

"The losers are Malaysians who are forced to bear higher electricity prices on top of the recently implemented goods and services tax," he said.