Most of us are short of filing for a missing persons report on 1MDB management. You run the operations on a daily basis, not the Prime Minister. Leaving the Prime Minister and the Government alone when under attacked for your mess is definitely not professional, what more to say with the flip-flop Parliamentary replies that were based on points submitted to the Ministry.
Anyway, after reading the arguments written by independent parties who 'defended' 1MDB recently on online news portals and social media, my fingers became itchy and here I am typing this.
I read that the arguments supporting 1MDB's existence and its hands in the takeover of the IPPs were:
a) 1MDB bought the IPPs.
b) There is a revised power purchase agreement.
c) TNB registers higher profit as a result
d) Malaysian consumers benefit from lower tariff
e) Petronas will not have to incur higher subsidy which benefits only these private companies
f) Consumers are the ultimate winner
g) We should thank 1MDB for saving our country from excessive subsidy granted to IPPs from the earlier regime
I'm not sure if these people are actually experts or consultants but as much as I know with my amateurish knowledge, PETRONAS subsidies do not benefit only these private companies or IPPs. The Government subsidises gas at approximately RM10bil a year annually, depending on gas prices, through Petronas by keeping gas prices below market rates. These subsidies are enjoyed by everyone who uses gas such as the manufacturing sector and of course including TNB and the IPPs.
What's the agenda of these people by singling out that only the IPPs benefited with words like 'mistake done since 1990s' and throwing shots at Tun?
I will give in if you say the point of controversy here is the quantum which TNB pays to the IPPs.
The electricity sector is broken down into three parts - generation, transmission and distribution. Back in the 1990s, Tun wanted to break down the monopoly of electricity generation by TNB after the nationwide blackout.
The only issue was, who was willing to come in to a highly regulated industry? Let's not beat around the bush. When we mix government regulations, politics, and the magic word "demi rakyat" together, it's a no-go zone basically for any investors. I think some of the telco CEOs are hating their jobs now, if you know what I mean.
I've read somewhere that the IPPs were allowed to have returns on investment of 20%. Was that excessive or fair I leave it to you. But just to highlight, the average lending rate in the 1990s were between 8-12% and investors were able to get annualized returns of about 18% from investing in stocks. I don't even want to talk about opportunity costs in construction and properties at a time when Malaysia was booming. While we are on this, isn't it true that TNB also owned shares in the IPPs?
Going back to the 1MDB argument, it seems to me that 1MDB has two objectives only -
(1) to buy over IPPs, sell electricity cheaper to TNB, TNB make more profits
(2) properties such as the development of TRX
I will leave point 2 for another day.
I find it rather amusing to see how 1MDB is being marketed or positioned to be the saviour of the energy sector. Hilarious when I read that because of 1MDB's takeover of the IPPs, the Government saved money and 1MDB charges lower rates to TNB which then increased TNB's net profits. And along the way, the rakyat enjoyed low electricity tariffs.
If that is the case,
(a) At what rates are the IPPs (under 1MDB now) selling to TNB? I take it as 'at a lower rate', but what is it? Cost price, with a profit?
(b) Why are IPPs and Tun branded as though they are the devils while 1MDB are the saviors and TNB the model GLC company? Why do we need to go so far? So, can the rakyat enjoy even cheaper electricity tariffs since TNB is making more money nowadays?
(c) What did 1MDB tell their institutional investors - both local and foreign - whom they sold their bonds to and whom they borrowed money from? Did 1MDB tell them that they are taking their money for them to buy power plants just to earn lesser (kalau ada lah) by selling energy at a cheaper rate to another unrelated company so that it makes more profits and the rakyat pays the same tariff as before? If not, that's a crime. What's that called, intentional criminal breach of trust?
(b) Why did we raise funds by selling bonds to KWAP, EPF and others? So, we actually borrowed money from the rakyat, to buy IPPs, charge lower rates to TNB, suffer losses and liquidity issues, so that TNB makes more profits and maintain the tariff for the rakyat's benefit? I don't get it.
Perhaps a consultant, preferably a financial consultant, and the Treasury can enlighten us on how do we expect to raise funds by selling securities - MGS, GLC bonds, Sukuk etc - in future?
Go back to the drawing back, you. And come back with better answers and argument.
Otherwise, all of us should just shut up and wait for the Auditor General's Report, the single most credible voice in this country which the Prime Minister has tasked to leave no stone unturned in this mess. That's when we talk.