Winners and losers from the Johor power plant deal

19-Jun-2014 Intellasia | The Malaysian Insider | 6:00 AM Print This Post

Be honest, did anyone seriously believe YTL Power International Bhd would voluntarily withdraw from a consortium that won a contract to build and operate a power plant in Johor through direct negotiation and opt instead to compete for the project through an open tender?

Remember this is 100-day Malaysia where all is forgotten after 100 days.

It is reasonable to suggest that after another week or two of negative headlines, the issue of the power plant would have been relegated to the back pages, allowing the main beneficiaries – the Sultan of Johor, YTL and a certain individual closely-connected to the PM – to carry on as usual.

That business as usual did not happen in this case is cause for a small celebration. The Malaysian Insider looks at the winners and losers in this episode.


1) Malaysia and Malaysians

It is always a good day when transparency and governance trumps opaque business practices – the type of wheeling and dealing that has cost Malaysia dearly and saddled the government and taxpayers with white elephants and projects with bloated overruns.

2) Tan Sri Dr Ahmad Tajuddin Ali and Datuk Mohd Nasir Ahmad

Both of them are great believers in competitive bidding and have tried to make sure that the country’s powerful and well-connected also abide by the rules of the game.

They were prepared to give up their positions and perks on the Energy Commission on a matter of principle. Too few Malaysians in positions of influence are willing to stand up for what is good for Malaysia.

3) The Tenaga Nasional unions, the opposition, the media and non-governmental organisations.

This was a rare occasion when enough forces and institutions came together and applied sustained pressure on the award of the 4A. In the last few days, it has become clear to YTL that the fallout from Tan Sri Francis Yeoh’s comments on crony capitalism would be a millstone on this power plant project, with the potential to completely shutdown the project and make members of the consortium outcasts.

The final nail came with the call by the unions for the government to withdraw the award of the project through direct negotiation. prime minister Datuk Seri Najib Razak is likely to ignore the media and the chattering class but the idea of clashing with unions seems to unnerve him.

4) YTL

You don’t think they qualify as winners? Of course they do. They exit the consortium on their own, but yet are still in pole position to win the right to build the 4A power plant through competitive bidding.

The simple fact is this: loath them or love them, YTL is a well-run company with an excellent balance sheet. Add to this their powerful partner from the state of Johor and they must be favourites to win the contract to build the power plant in Johor.


1) Tan Sri Francis Yeoh

Surely the moral of the story is this: silence is the best policy when you and your shareholders have benefited enormously from close ties with the government. Yeoh is an erudite businessperson and has built up a reputation for delivering top-class products, Pangkor Laut and the restored Majestic Hotel comes to mind. But the man will not win any popularity contest even on Mars.

Some people dislike his self promotion and others just detest the fact that the IPP concession given to YTL during the Mahathir era was lopsided. It was silly of him to stand before his peers at the Pemandu function and even touch on the topic of crony capitalism.

Heck, this was like preaching to most cynical of cynics: men and women who believed that YTL’s financial muscle today is the result of solid political connections.

His comments started a firestorm and resulted in all eyes being trained on YTL projects, including the 4A power plant.

* Datuk Seri Dr Maximus Ongkili

The minister of Energy, Green Technology and Water got himself in knots when trying to justify the government’s decision to award the gas turbine power plant through direct negotiation. He said it was necessary to fast track the project because of the “uncomfortable” reserve margin and the May 7 outage which hit six states.

But as the Association of Water and Energy Research Malaysia (Awer) pointed out the issue of reserve margin would be addressed when nine new power plants are up and running between 2015 and 2019. Ongkili was caught out and he will look even sillier now that YTL has pulled out of the consortium and the process to award the contract will have to start all over again.

* Datuk Seri Najib Razak

Expect his already rocky relationship with the Sultan of Johor to worsen. Not because he pulled the plug on the project. He did not.

But there will be questions asked down south why other royals were allowed to have their own power plants without controversy.

Also, why didn’t the prime minister insist on competitive bidding from the start? After all, even the award of the power plant to the controversial 1MDB went through the proper process.

What made this power plant so special? The Malaysian Insider


Category: Malaysia

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