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“Stop Speculating Until Auditor General’s Findings On 1MDB”

By 22 Mei 2015Tiada komen8 minit bacaan


Facebook user Eol Zari took to penning his own thoughts on the 1Malaysia Development Berhad (1MDB) issue on May 18, and the post has now gone viral.

On the original posting itself, Eol Zari’s thoughts on the much-talked about nation’s sovereign fund have been shared 247 times as at press time.

Stating that he is a  liquefied natural gas consultant, Eol Zari said that he decided to put down his thoughts on the matter, following his interaction with various organisations in his line of work, among them Petronas, Tenaga Nasional Berhad and Pemandu.

The post can be viewed via this link:

The following is Eol Zari’s posting as taken from his Facebook page (it has not been edited):

In the past, I have not said much about the controversial issue surrounding 1MDB. Why 1MDB? What are the roles of 1MDB and its contributions to our national economy?

I have been keeping this information to myself for sometimes as I feel it may not be the right time to share with my esteemed readers. However, today I was taken by the information transmitted to me by my close friend. This piece of information is similar to the one which I have been keeping all this while.

I am convinced that this is a non-biased piece of information. Being a LNG Consultant and in the course of my works, I have the opportunity to interact with PETRONAS, TNB, TNB Fuel, PEMANDU, Energy Commission and other known organizations for nearly 3 years from 2011.

I help to educate the personnel from PEMANDU, TNB, Energy Commission on the new source of energy — Liquefied Natural Gas as a feed for the power plants and city gas.

My area of specialization is energy. I was once a principal specialist in LNG shipping operations in PETRONAS. I have spent 35 years of my career in this field. Energy is the life blood for infrastructures development and this is a major ingredient for our country in achieving economic progress to become a developed nation.

I leave it to my esteemed readers to interpret on what I have outlined. After all we are human and I expect each and every one of us to have their own views.

Back in 1990s, Malaysia introduced the concept of Independent Power Plant (IPP) for electricity generation. This initiative was under our former Prime Minister, Tun Mahathir.

The main players who owned the IPPs were Tan Sri Syed Mokhtar, YTL group, Genting and Tan Sri Ananda Krishna. Sime Darby was also one of them but being a Government linked company not much attention was given.

These players got the most attractive deal and it was a one sided. The former chairman of TNB, the late Tan Sri Ani Arope, a man of integrity refused to sign the agreements and he voluntarily resigned in protest.

The opposition parties took the Government to task for granting a one sided deal. They argued that it was a “crony’s agreement” and questioned the needs for the Government to grant substantial subsidy to the IPPs.

Even in May 2011, one of the opposition members regarded these IPPs as “a major drug factory” that required substantial subsidy from the Government of estimated RM19 billion a year.

In the mid-2011, I was taken as a LNG Consultant to look into the possibility of importing LNG through the Malacca Regas Terminal at Sungei Udang.

This terminal is an open gate similar to the one I used to do in United Kingdom – the Dragon LNG Regas Terminal located at Milford Haven in Wales. The Sungei Udang’s LNG Regas Terminal is owned by PETRONAS and the imported LNG is vaporized as gas to flow into the PGU pipelines.

This is in view of the insufficient domestic gas from the East Coast of about 950 mmscfd. TNB requires about 1350 mmscfd.

The capacity of Sungei Udang is about 500mmscfd or equivalent to about 40 cargoes of imported LNG via the Q Flex LNG ship of capacity 210,000 m3 each.

“Actually, I am humble to note that the concept of the floating LNG storage using two of our old LNG ships with an island jetty, the first in the world was mooted by me to the CEO of PETRONAS Gas the ownership of this project.

This idea came by while discussing with him in the car on the way to Narita Airport from Tokyo. With this idea, PETRONAS saved for not doing the dredging and a greenfield shore LNG storage which costs would be very substantial.

As a result of the marked disparity between imported LNG and domestic gas price, TNB who earned a thin margin from the IPPs was not able to absorb this disparity in prices and therefore was not able to buy the gas from the imported LNG directly. Ultimately, PETRONAS has to be the importer and therefore a subsidizer.

Under PM Najib, a company, My Power was formed by the Government to initiate renegotiation with the IPPs for a balanced deal.

Thereafter, 1MDB purchased the IPP from Ananda in March 2012 and followed by the purchase of Genting in August 2012. Subsequently, in October 2012, Energy Commission announced the decision on the concessionaries agreement with the IPPs.

As outlined in this agreement, there is no further extension of concession for the IPP owned by Ananda and also new concessions for the other three IPPs. Only new concessions are to be given to 1MDB and TNB.

This new arrangement will ensure that private companies will not earn excessively at the expense of Government’s subsidy.

As a result of the mistake done since 1990s, for the past 20 years an approximate of about RM100 billion was lost by PETRONAS and TNB because of this inferior deal.

Actually, credit should be given to PM Najib, Energy Commission and 1MDB for saving our country from this excessive subsidy granted to these favored companies from the earlier regime. To me credit should be given to whom it is due.

Actually, the rates of tariff for consumers for Peninsular Malaysia should be increased by July 2014 and January 2015 under the Fuel Cost Pass Through (FCPT).

But it was never increase because the new revised agreement was improved and was more attractive and balanced to TNB, the final purchaser. Instead, the electricity tariff was reduced from March 2015 due to the reduction of coal prices and the reduction of tariff of these IPPs.

Under this new arrangement, TNB started to register substantial profit from 2013, 2014 and the first quarter of 2015.

It records a profit of RM2.3 billion in the first 3 months of 2015. Therefore, with this revised arrangement the benefactors are:

1. TNB registers higher profit.

2. The Malaysian consumers benefit from lower tariff partly due to the reduction of oil prices.

3. PETRONAS will not have to incur higher subsidy which in the past benefit only these private companies, and,

4. Consumers of electricity are the ultimate winner.

The losers are the original owners of the IPPs. And this may be the reasons why they are not happy with 1MDB and PM Najib even from the senior members of UMNO.

The issue of Tun Razak Exchange (TRX) and the purchase of land by Tabung Haji is insignificant compared with the amount saved by the revision of the agreement initiated by the present Government.

On the other side of the coin, there are allegations by the oppositions for the misused of fund by 1MDB, the role played by Jholow, the disappearance of proceeds from the Petro Saudi investment and latest the controversial sale of a piece of land of about 1.5 acres for RM188 million to Tabung Haji’s subsidiary.

These issues started late last year when 1MDB was not able to raise enough fund to pay their loan installment.

The issue is now further twisted and makes it looked as though 1MDB is losing RM44 billion which is not the case.

Actually, 1MDB does not lost RM44 billion. What it lost will be the substantial amount of loan repayments which they have to dig from somewhere because of the reversed operating leverage.

Temporarily, their current income is not able to cover the loans and other expenses.

However, given time they will be able to reverse this situation. Additionally, because of this bad publicity it is feared that Deutsche Bank may request for early settlement as 1MDB is not able to secure additional collateral.

We should refrain from speculating further pending the outcome of the Auditor General’s findings which will be available the latest by end June 2015.

Other personalities including the prominent lawyer and former minister, Zaid Ibrahim commented that as the Chairman of 1MDB, Najib should stand up and face this by responding to the allegations.

The Chairman of CIMB, who is Najib’s younger brother, during the luncheon meeting also asserted that the Chairman of the Board and its members of 1MDB to do the same.

The significant credit due to the Government helmed by Najib to save the nation was downplayed but those temporary difficulties faced by this organisation in this process of helping the nation were exposed and blotted up by the oppositions.

The irony is that during Tun’s tenure, the oppositions were the one who were very vocal when the IPPs owners were given preferential treatment.

And now they in turn are equally vocal to discredit the PM and 1MDB who have saved the country from incurring unnecessarily substantial subsidy.

But one thing for sure, the main agenda of the oppositions is to find fault and blotted the mistake or misdeed of the Government or the GLCs in order to earn mileage and swing the voters’ sentiments to their side.

That is my fair view and I leave it to my esteemed readers to make their own assessments and judgments on this issue.

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