1MDB’s 'generosity' to Ananda & Genting questioned in purchase of IPPs

The plan by 1Malaysia Development Berhad to purchase lapsing Independent Power Producers has been questioned by PKR, who said it was against the policy set by the Energy Commission which promised that any new deals would be more competitive for IPPs.

“This is above the average price-book ratios of power stocks in the region. In fact, it would actually be cheaper to build a brand new plant of the same size than to buy Genting’s 17-year old one,” said the party's communication director Nik Nazmi Nik Ahmad.

He revealed that 1MDB had purchased tycoon Ananda Krishan-owned Tanjong Energy Holdings at RM8.5 billion and Genting’s Mastika Lagenda at RM2.55 billion. Both IPPs concessionaires will expire in 2016 and 2017 respectively.

Ananda would make a RM1.9 billion profit in the deal, while Mastika, with a shareholder fund of RM422 million would see a windfall as the purchase price was about six times the price-book ratio.

Moreover, Nik Nazmi pointed out that Genting had less than three years in its gas purchase agreement with Petronas.

"Thus any generous valuation for the IPPs does not make sense unless, contrary to the Energy Commission’s statement, there is to be a repeat of the lopsided IPP agreements of the past, at the expense of Petronas, Tenaga Nasional Berhad and the taxpayers,” he said.

He said 1MDB owed Malaysians an explanation whether the deal was to enrich cronies of political leaders.

-Harakahdaily