By Khairie Hisyam
A wide difference in bids submitted for ailing 1Malaysia Development Bhd’s (1MDB) power assets has raised eyebrows.
Of the three bidders announced by 1MDB as having submitted final, binding and fully funded bids on Oct 16, Tenaga Nasional Bhd – the only local bidder – submitted a bid amounting to RM8 billion in total, said sources to KINIBIZ.
By contrast the foreign entities, Qatari outfit Nebras Power and China General Nuclear Power Group, have submitted a joint bid of just under RM10 billion or 25% higher than Tenaga Nasional.
KINIBIZ reported on Oct 29 that the two foreign entities are joining together to submit a joint bid for the power assets, which are parked under Edra Global Energy Berhad.
At a press conference on Oct 31, 1MDB president and group executive director Arul Kanda declined to comment on the report, stating he couldn’t speak on behalf of the bidders.
According to industry sources with knowledge of the matter, the value of Edra Global Energy’s power assets collectively come to roughly RM7 billion, based on their existing power purchase agreements (PPAs).
A further RM1 billion may be put on its Track 4B concession for a 2,400-megawatt (MW) power plant in Malacca, said sources, which has yet to be built.
This means Tenaga Nasional’s bid may be the right ballpark, said sources to KINIBIZ. However, this raises eyebrows on how the foreigners are able to offer a substantially higher bid.
The broad valuation of power assets is, in general, roughly known within the industry, said one industry observer to KINIBIZ.
If the foreigners are able to offer a substantially higher price than the generally accepted ballpark then “there may be a quid pro quo somewhere else, who knows,” according to one source.
Edra Global Energy’s power assets, totalling 13 power plants both domestic and overseas, collectively boast 8,776MW in total generation capacity.
Some 3,652MW of that come from its five power plants in Peninsular Malaysia, making it the second-largest power producer in Malaysia behind Tenaga Nasional and the single biggest independent power producer just ahead of recently relisted Malakoff Corp Bhd.
Headquartered in Doha, Qatar, Nebras Power is an investment outfit controlled by Qatar Electricity & Water Co, Qatar Petroleum International and Qatar Holding. It was established “to invest in feasible and profitable large-scale power and water projects around the world,” according to its website.
China General Nuclear is in turn a state-owned outfit mainly involved in nuclear power plants. Its Hong Kong-listed subsidiary CGN Meiya Power Holdings Co Ltd previously expressed interest in the power assets but later told the stock exchange it is withdrawing from the bid on Oct 9.
The Qatar government, via its Qatar Investment Authority, had on May 14, 2010 signed a memorandum of understanding with 1MDB to explore ways to work together via investment cooperation including in the power sector and real estate development in the Klang Valley, according to 1MDB’s website.
On Oct 31, Arul announced that the company is expecting offers to come in for a majority stake in its 486-acre Bandar Malaysia development by mid-November.
1MDB has shortlisted four potential bidders and three are likely to submit offers, said Arul further.
“We have had close to 40 parties expressing interest to become our development partner,” said Arul in respect of the Bandar Malaysia project. “We will sell at least 60% of our equity.”
Of the three likely to submit bids in 10 days’ time, Arul said two are foreign consortiums, while the third is a local entity. However, he did not name any party in particular.
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