See doubts if acquisition of Bakun HEP a major concession
KUCHING: Chief Minister Datuk Amar Abang Johari Tun Openg has been urged to reveal the cost-benefit analysis and the due diligence report on the acquisition of shares in Sarawak Hidro Sdn Bhd to take over ownership and operation of the Bakun hydroelectric power ( HEP) plant from the federal government.
In making this call, Batu Lintang assemblyman See Chee How asked Abang Johari: “What is the basis to say that this is a major concession by Putrajaya?
“Naturally, it is better for Sarawak to have full ownership of the gigantic dam and electricity generation facility that is constructed in Sarawak. But with the enormous financial outlay in acquiring the dam, how is this going to benefit Sarawak? It appears clear that Sarawak is bailing out the federal government,” he said in a press statement yesterday.
See, who is state PKR vice chairman, was commenting on the announcement by Abang Johari on the acquisition of Bakun HEP from the federal government by the state.
In any major acquisition, See said it is usual and standard practice that an investigation or audit be conducted on the proposed or potential investment to review the financial records and anything else deemed material to the sale, all the legal, financial, and commercial risks associated with the acquisition and assessment of the strengths and weaknesses of alternatives to determine options that may be the best approach to achieve benefits.
“Has the state administration engaged consultants to conduct the cost-benefit analysis and/or the due diligence assessment?”
He said: “We must bear in mind that, back in 2011, the Sarawak state administration had made an attempt to acquire the Bakun HEP from the federal government for RM7.3 billion. The acquisition did not materialise but we have entered into a 30year power purchase agreement commencing on June 1, 2011 for the state to purchase electricity from Sarawak Hidro at 6.25 sen per kilowatt hour.”
Financially, See pointed out that Sarawak Hidro Sdn Bhd has a whopping non-current liabilities of RM5.25 billion and current liabilities of RM907 million at the end of 2015.
“The estimated worth of the electricity generation facilities is RM7.29 billion. Undoubtedly, Sarawak Hidro is making profit, but due to the power purchase agreement it has with Sarawak.”
See said with the agreement to purchase the equity interest of the company at RM2.5 billion and bearing the liabilities of more than RM6 billion, the state is now acquiring the hydroelectric power dam at more than RM8 billion.
“To say that we are acquiring it from the federal at a huge concession is certainly not true.”
He pointed out that the entire revenue of Sarawak Hidro was from the sale of electricity to Sarawak.
“We are now to sell the power to ourselves and at the moment, both Bakun and Murum HEP dams are operating at less than half of their capacities. On the other hand, the electricity ‘off-takers’ or potential consumers are not here. Already, for 2015 and 2016, Sarawak Hidro’s turnovers were below its projections.”
See said: “In the long run, will this turn into a huge financial burden for the state and all Sarawakians? For the long term, we have to take into consideration the financial commitments in servicing the loans and the income we can generate from all the electricity generation facilities we have in the state.”
He said it was not wrong for Sarawak to bail out the cashstrapped federal government, but the state administration must ensure that the monies from this bail- out would go towards benefitting Sarawak, “for example the financing of the Pan-Borneo Highway and our rural development and transformation projects”.
“In any event, I would urge the Chief Minister to reveal the full financial details of this acquisition, the state’s short and long term plans to meet the added financial commitments, and how this acquisition will serve the best interests of Sarawak.”