By G. Sharmila
YTL Power International Bhd is dropping out of the consortium that was conditionally awarded Project 4A by the Energy Commission late last month, the company said today.
In a filing to Bursa Malaysia, YTL Power said it was thankful to the government for having confidence in the company, as part of the consortium to deliver the project on a fast track basis.
“However, in view of the misconception over the Project, YTL Power has decided not to participate in the Project under the present arrangement to dispel any misgivings over the Government’s commitment to transparency and good governance,” the company said.
It added that it welcomes any opportunity to participate in the project or other new capacity requirements on a competitive basis and is prepared to do so on an accelerated timeline. “We are confident that we will be able to offer competitive rates as demonstrated in recently concluded tender exercise,” YTL Power added.
“YTL Power remains committed to investing in this country under the leadership of the present Government and supporting the Government’s Economic Transformation Programme,” it said.
The consortium that was conditionally awarded Project 4A, a new combined cycle power plant in Johor comprised YTL Power, Tenaga Nasional Bhd (TNB) and Sultan of Johor vehicle SIPP Energy Sdn Bhd. The award was given via direct negotiations instead of competitive bidding, which infuriated many in the industry. CIMB Research estimated that the project will cost RM6 billion.
Sources indicated that TNB had been offered a 20% stake in the consortium, with YTL Power and SIPP holding equal shares of the remaining 80% stake. However, TNB recently reiterated that it is still evaluating the conditional award.
Azman Mohd
Yesterday, StarBiz quoted TNB chief executive officer Azman Mohd saying that TNB could only confirm that it had received the offer letter and refuted claims or assumptions that it was already part of the consortium.
“We are evaluating the offer and also our role in this project before concluding if it is favourable for TNB to participate by July 25,” StarBiz quoted him saying.
On Monday, TNB unions jointly protested against YTL Power’s involvement in the power plant project, although they did not blame TNB management. Project 4A has been surrounded by controversy due to its award via direct negotiations, even causing a commission member of the Energy Commission to resign due to his unhappiness over the award.
YTL Power withdrawing from Project 4A, could be a big blow to the company, which also lost out on the award of Project 3B, a coal-fired power plant with 2,000 megawatt capacity estimated to cost RM11 billion. That power plant project was eventually awarded to the 1Malaysia Development Bhd-Mitsui Co Ltd. consortium.
With Project 3B, it had initially been reported that the YTL Power-SIPP consortium had put in a lower bid. However, it was later reported that the Energy Commission chose 1MDB because YTL Power’s bid had a higher total cost due to the distance of its power plant to the entry point of the grid.
Commenting on the award, the Energy Commission had said that the selection of the preferred bidder of Project 3B was based on the criteria of full compliance with all the bid requirements as stipulated in the request for proposal (RFP) document and the lowest levelised tariff offered.
At 12.30pm, YTL Power’s share price remained flat at RM1.48.
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