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Wednesday, January 7, 2015

1MDB's power plant project facing delays, Rafizi warns

1MDB's power plant project facing delays, Rafizi warns
A 1Malaysia Development Bhd (1MDB) power plant project is currently facing delays, which would in turn impair the company’s ability to repay its RM42 billion debt, claims Pandan MP Rafizi Ramli.
Citing internal documents, Rafizi said 1MDB subsidiary Jimah East Power Sdn Bhd has applied to the Energy Commission to extend the project deadline from Nov 15, 2018, to May 15, 2019.
Rafizi  explained that 1MDB currently needs to list its independent power producers (IPPs), such as Jimah East, on the stock market to balance its debts, and any delay in doing so would further weaken its financial position.
Jimah East is particularly important to 1MDB because it is a new power plant, and 1MDB is hoping that this would make its portfolio of mostly older IPPs more attractive to investors, he claimed.
“1MDB needs a capital injection from the listings of its IPPs to repay its high debt amount of over RM42 billion as of the 2014 financial year.
“Therefore any delays in the Jimah Timur power plant are expected to delay the listing of 1MDB subsidiaries on the bourse, and the further the listing is delayed, the weaker will be its financial position because it will continue to depend on debts.
“Now that it (1MDB) can’t stick to existing loan repayment schedules, and without this listing, there are concerns that its cashflow will become worse,” Rafizi told a press conference today.
Jimah Timur is located in Negri Sembilan, and comprises two coal-fired generators with a capacity of 1,000 megawatts each.
‘Reclamation work has yet to begin’
It is to be built on reclaimed land and mangrove swamps, but Rafizi claims that even the reclamation work has yet to begin, which in turn could mean more delays in the future because such works require considerable time and planning.
Rafizi added that the delays could result in higher electricity tariffs as well, as Tenaga Nasional Bhd (TNB) would have to cover the shortfall if any IPPs could not deliver its power on time.
However, he said he would only elaborate on this at a separate press conference tomorrow.
As for the documents he received, Rafizi said it pertains to a meeting between the Energy Commission and Jimah East Power (on 1MDB’s behalf) on Dec 4, following its application to extend the project deadline.
He said he has verified the document’s authenticity, but will not be making these documents public except in court in order to protect the whistle-blower’s identity.
He claims that the delay’s cost to the public was among the issues heavily discussed at the meeting.
On a separate matter, Rafizi said he does not doubt the credentials of the new 1MDB group executive director Arul Kanda Kandasamy (right) and dismissed claims that the appointment was because he had political connections.
“My only doubt or scepticism about the whole thing is that I don’t think he will have the full freedom to decide, like the last two CEOs.
“The decision will be made higher up... I think it will be a tough job for him to balance professionalism and all these interference,” he said.
Elaborating, Rafizi said he was referring to interference from the board, its advisers, Prime Minister Najib Adbul Razak, and those close to Najib.
1MDB is a state investment company, with Najib heading its board of advisers.
When contacted for a response, Arul Kanda reiterated that he would not have taken the job if he was not confident of reversing 1MDB’s fortunes, and that he will be finding ways to maximise the value of 1MDB’s portfolio.
“I am confident that I have the full backing of the board and our shareholders to take this business forward and, once the strategic review is completed, steer it in a direction that I believe will allow us to generate maximum value from our assets,” Arul said.
1MDB has declined to comment on Rafizi's allegations on the Jimah Timur project. -Mymetro

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