KINIBIZ As Malaysians await the aftermath of the Edra Global Energy power assets sale, there are growing concerns that the sale may see foreign ownership of local power plants exceed 49 percent for the first time in history. The question, however, is whether these fears are really justified.

On the surface, changes in ownership of power plants - whether into foreign hands or otherwise - do not impact consumers directly.

Sources familiar with the industry told KINIBIZ that once awarded, power purchase agreements (PPAs) are iron-clad in the sense that the tariff rate and other conditions cannot be changed even if there is a change in equity ownership vis-a-vis the concessionaire.

Technically, sources say the PPAs do make allowance for potential changes in equity ownership. However, such terms do not entail a renegotiation of the terms contained the original award - this means whichever bidder ends up buying over Edra Global Energy’s power assets would have to abide by existing terms of the PPAs attached to them.

To allow a renegotiation of tariffs already set out in a PPA would set a dangerous precedent for future demands from other PPA concessionaires, which would in turn put the Energy Commission (EC) on the back foot in regulating the sector.

Concerns, however, loom large on the implications that follow the unprecedented scenario whereby foreigners have majority, even full, equity control over Malaysian power plants.

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Yesterday: Putting a price tag on Edra

Tomorrow: Transparency crucial in Edra sale