TNB to go ahead with Track 4A with SIPP Energy

PETALING JAYA: Tenaga Nasional Bhd (TNB) and SIPP Energy Sdn Bhd, which is linked to Johor royalty, have decided to go ahead with the Track 4A power project, which was controversially awarded through direct negotiations despite much opposition.
In a filing with Bursa Malaysia, TNB said it signed a heads of agreement with SIPP Energy yesterday to build, own and operate the 1,000MW-1,400MW power plant in Pasir Gudang, Johor.
TNB did not offer details on the cost of the project and tariff offered by the consortium. There was also no mention of the shareholding structure of the consortium.
In May this year, the Energy Commission (ST) awarded Track 4A to a consortium that included YTL Power Corp Bhd, SIPP Energy and TNB via direct negotiations. The commission had justified the award of the project worth between RM11 billion and RM13 billion through direct negotiations by stating that it had to be done on a fast-track basis.
The award, which caused an uproar, however, saw YTL Power withdrawing from the deal on June 17, saying that it would be more than happy to participate in a competitive tender for the job instead.
Early this month, ST chairman Datuk Abdul Razak Abdul Majid said the conditional awards to the remaining consortium members TNB and SIPP Energy stood and that it was up to the two to discuss their next course action. He had also stated that future power deals may not necessarily be awarded via competitive bidding, backtracking from earlier commitments made to sticking to a competitive bidding process.
Yesterday's announcement is not likely to go down well with proponents of transparency and governance in the power industry.
The Association of Water and Energy Research Malaysia (Awer) president Piarapakaran S told SunBiz that he was disappointed with the latest development, saying that it sent the wrong signal to investors. Awer is a non-government organisation for the research and development of the water, energy and environment sectors.
"TNB should not have decided to take on this project," Piarapakaran said, adding that all the three unions under TNB are also against direct negotiation of Track 4A and are in full support of the competitive bidding process.
"How is TNB going to explain this to their staff ?," he asked.
TNB's four unions representing the 34,900 members and TNB employees had previously handed a memorandum protesting the award of the contract which led to YTL Power withdrawal.
Piarapakaran reiterated that the reduction in cost of planting up a power plant only can be achieved via transparent competitive bidding process.
He urged lawmakers to bring the matter up in Parliament to put a stop to this latest deal. At the same time, he said, Awer will write a letter to TNB asking for an explanation.
He cautioned that if this deal based on direct negotiation is given the go-ahead it will set a dangerous precedent. " It could be very ugly after this," he said.