Share sale of Edra Global Energy could spark TNB tariff hike

PETALING JAYA: 1Malaysia Development Berhad's (1MDB) 100% share sale of Edra Global Energy to a China-Qatar consortium will compromise Tenaga Nasional Berhad's (TNB) position in the local market and may cause tariff hikes in the future.
Pandan MP Rafizi Ramli said this gives the foreign company, China General Nuclear Power Corp (CGN), full control on 18% of the country's energy output, which could potentially risk stable power supply to the people.
For example, Rafizi said the consortium can request for higher tariffs and stop production if concession negotiations, set to begin in 2016, does not favour them.
Speaking at a press conference at PKR's headquarters today, he said then TNB can only announce a tariff hike without naming the parties responsible as concession agreements are under the Official Secrets Act (OSA).
He also said the federal government broke its long-standing policy of limiting foreign ownership of strategic assets, such as Independent Power Producers (IPPs), to 49% by exempting the deal.
Rafizi said the exclusion could open a flood gate to foreign ownership of such assets in the future as well.
"If you can make an exemption now, you can do it again, and foreign companies will ask the government in the future why an exemption was granted to Edra and not them.
"It is 18% now, but it could grow up to 20% or 25% in the future, and this may eventually lead to substantial foreign ownership in power production," he said.
On Monday, 1MDB announced that it will sell Edra to CGN for RM9.83 billion, much higher than TNB's valuation of RM8.2 billion and close to PKR's own estimate of RM8 billion.
Rafizi, who is PKR secretary general, said the extra RM2 billion gained from the sale will not only be unable to pay off 1MDB's RM42 billion debt, but will also give CGN a reason to raise tariffs.