Sale will not lead to increase in IPP tariffs, says 1MDB

1Malaysia Deve­lopment Bhd has assured the public that independent power producer tariffs will not be increased over the next 10 years although its power assets were sold to a China-owned company.
It said that although there was a change in ownership of the power assets under Edra Global Energy Bhd to China General Nuclear Power Corporation (CGN), IPP ta­­riffs were fixed for the duration of the purchase agreement.

“On average across all the Edra power plants, this is for the next 10 years. So, there is no question of the IPP tariffs being increased for the life of the PPA (power purchase agreement) despite the change of ownership,” it said in a statement.

1MDB said former prime minister Tun Dr Mahathir Mohamad should not mislead the people by not mentioning in his blog that the tariff for the Edra assets were fixed for the duration of the agreement.
1MDB said CGN Group would pay RM9.83bil in cash and absorb Edra’s RM7.43bil debt in operating cost, thus effectively reducing 1MDB’s debt by up to RM17bil.

The company said this was well within its anticipated debt reduction of between RM16bil and RM18bil as announced earlier in its rationalisation plan.

1MDB insisted that the RM17bil debt reduction was over and above the RM2bil cash dividends received from the power assets during the duration of its ownership.

It said president and chief executive officer Arul Kanda had explained the matter clearly last week.
The firm said it had “broke even” on its investments through an international tender process, despite having to sell its assets.