PETALING JAYA: The Energy Commission (EC) and 1Malaysia Development Bhd (1MDB) have dismissed speculation of new power plants being proposed by the sovereign wealth fund.
The EC has denied receiving any proposal from 1MDB to build two mega power plants of 2,000MW each, while 1MDB has described the proposals as purely speculative.
“We would like to state that the EC has not received any proposal from any party regarding the issue,” the power-sector authority said in an email to StarBiz.
As for 1MDB, it says it would not comment on market speculation that it has approached the EC to build two power plants.
“Our policy is that 1MDB does not comment on speculation and market rumours,” it said.
For the past two weeks, speculation was rife that 1MDB had submitted an unsolicited bid to the EC to build two 2,000MW power plants, one coal-fired and another gas-fired, to replace existing ageing ones in Peninsular Malaysia.
Then last week a weekly publication quoting sources reported that 1MDB had proposed to the EC to build a new 2,000 MW coal-fired power plant on its recently acquired land in Pulau Indah, Klang.
According to power industry officials, the speculation of the federal government-owned 1MDB putting in a proposal to build new power plants had ruffled feathers within the commission.
“Some officials in the EC were already discussing among themselves privately that they would not entertain unsolicited proposals as the Government had already planned years ahead for the new generation capacity required to meet growing demand for electricity in the country,” said an official.
As it stands, an additional generation capacity of 7,500MW had been planned to come onstream by 2019.
Total installed capacity in Peninsular Malaysia currently stands at 21,500MW, of which 52% is generated by national utility company Tenaga Nasional Bhd, while the remainder 48% is generated by independent power producers (IPPs).
The peak demand so far was 16,583MW, which was registered on May 28, 2014.
According to the EC, electricity demand is expected to grow at an average 3.31% per year from 17,152MW in 2014 to 19,492MW in 2018.
The debt-laden 1MDB, which is planning to list its energy assets on Bursa Malaysia in the fourth quarter of this year, had early this year bagged the much-coveted Project 3B for a 2,000MW coal-fired power plant in Negri Sembilan. The project, won under a controversial competitive bidding exercise, was valued at RM11bil.
1MDB, whose advisory board is headed by Prime Minister Datuk Seri Najib Tun Razak, owns 16 power and desalination plants in six countries, including Egypt, Sri Lanka, Bangladesh, Pakistan and the United Arab Emirates.
The group has a net power generation capacity of 5,570MW.
In Malaysia, the group is the second largest IPP, with assets including Powertek Bhd, which operates three power plants in Malacca; Kuala Langat Power Plant Sdn Bhd in Selangor and Jimah Energy Ventures Sdn Bhd in Negri Sembilan.
In a recent statement, 1MDB said the initial public offering of its energy assets was expected to raise about US$3bil (RM9.6bil). It said proceeds from the IPO would be used to fund future business growth, partial repayment of its outstanding debts and for general corporate purposes.
1MDB, which was launched in 2009, had accumulated total borrowings of RM36.2bil as at the end of March while its annual debt service stood at RM1.6bil. In 2012, its total debt stood at only RM3.4bil.
– THE STAR
