Friday, August 28, 2009

1 Black Sabah

The decision last year by the Sabah State Government to scrap the proposed 300MW coal-fired power plant project in Silam, Lahad Datu once again put the spotlight on the perennial power shortages which the people in this state have long suffered. For many, these disruptions to daily economic and social activities can only be suffered in silence as the decision makers are heartless and hard of hearing. It seems power cuts have become the norm in Sabah.

The sole power utility provider in Sabah is the Sabah Electricity Sdn. Bhd. (SESB) - 80% owned by national utility giant Tenaga Nasional Berhad (TNB), with the remaining 20% being owned by the Sabah State Government.

The manner in which the Silam IPP project was awarded in 2007 leaves much to be desired in the way of transparency and fair evaluation on the part of the Federal Government, and corporate governance on the part of TNB. For the first time, the Federal Government decided to undertake a tender exercise for an IPP project, with a supposed objective to obtain the best possible technical and commercial proposals. When this tender closed, sometime in June 2006, a total of 13 bids were received, including one from a TNB subsidiary i.e. TNB REMACO.

The chronology of events, as shown below, subsequent to tender closing gives substance to my earlier comments regarding transparency and corporate governance:

§ The evaluation committee, though comprising independent technical and financial experts, was headed by TNB, even though a TNB subsidiary was one of the bidders;

§ The evaluation committee then proceeded with a detailed evaluation of EACH of the 13 bids received, such bids being evaluated against their individual and specific merits and demerits;

§ The bidders were bidding for only 60% of the project’s equity as the bid documents clearly stated that the remaining 40% had been reserved for “Sabah bumiputera” interests;

§ When the Federal Government finally announced the award of the project almost a year after bids had closed, it awarded 80% of the equity of the project to a consortium comprising three of the original 13 bidders i.e. TNB REMACO, Eden-Nova Nusantara and Maser, and Yayasan Sabah the remaining 20%. How could evaluation of 13 unique, specific and individual bids lead to an award to a group of 3 of them? Was this group ever asked to submit a fresh proposal as a consortium? Why weren’t other bidders encouraged to team up as consortia and submit fresh proposals on the basis of consortia and not individual bidders? Why was the portion reserved for Sabah bumiputera interests inexplicably reduced from 40% to 20%?

§ This consortium proceeded to sign an engineering, procurement and construction contract (EPCC) even before its Power Purchase Agreement (PPA) with SESB had been negotiated and signed. One might see this either as taking a business risk or complete arrogance on the part of TNB, in that TNB felt it would easily be able to pressure its subsidiary, SESB, to put pen to paper. Why complain now that the turbines have already been ordered?

Now that the Sabah State Government has scrapped the project on environmental grounds, TNB/SESB is crying aloud as to why the project must be allowed to proceed albeit at another “more suitable” location. TNB/SESB’s premise is that such a power plant must be constructed in Sabah’s East Coast for contingency and system requirements.

Given this requirement then, and apart from relocating the project, shouldn’t TNB/SESB also be required to suggest alternative fuels for the power plant, gas perhaps? Sabah, as yet, does not have sufficient volume of biomass to sustain a 300MW power plant. The proposed Silam plant was to use imported coal from Kalimantan anyway, so why can’t natural gas be “imported” from Sabah’s West Coast to the East, either via pipeline or as liquefied natural gas (LNG) using sea-going tankers. After all, Tokyo Electric Power Company, Japan’s largest power utility, imports LNG from MLNG in Bintulu for its power plants. Perhaps by coincidence, the new Sabah Oil & Gas terminal at Kimanis is being designed to serve only as a transit point for gas being exploited offshore Sabah, this gas eventually being piped to Bintulu to be converted to LNG for export to Japan and China for use in power plants there.

Such a trans-Sabah gas pipeline could also serve as a catalyst for industrial development along its route especially for energy-intensive industries (e.g., cement and steel manufacturing) and gas-related industries like petrochemicals and so on.

At the time the project was being designed, coal was at a market price of around US$50 per tone. But in line with global fuel price increases, average coal price now stands at about US$100 per tone. In the Malaysian PPAs (power purchasing agreements), fuel price is a pass-through cost i.e. the power purchaser will pay the IPP whatever price it pays for its fuel. Bearing in mind that local natural gas for power production is quite heavily subsidized by the Federal Government, does not it make economic sense to use a fuel whose price is controlled as compared to one which is subject to the vagaries of market forces? The party eventually bearing the burden of high fuel costs will be the rakyat, as TNB is 70% owned by the Federal Government, leading to SESB being 56% owned by the Federal Government and 20% by the Sabah State Government i.e. a total of 76% in state ownership.

What will happen to the consortium? Will the same consortium be asked to propose a more environmentally-friendly power project and site? Why wasn’t there any coordination between Federal and State governments prior to the implementation of this project?

The sad saga of how the Federal Government continues to mismanage the award of power projects in Sabah does not end here.

In the mid-1990’s, the Federal Government awarded a 120MW open-cycle gas-fired IPP project in Kota Kinabalu to a consortium comprising Time Engineering, EPE, Sabah Energy Corporation and Aras Setia (an unheard of, local Sabahan political crony outfit). The consortium called itself Powertron Resources Sdn. Bhd. A few years down the road, Ranhill Berhad bought over the equity holdings of Time and EPE, thereby becoming the major shareholder in Powertron, subsequently re-naming it Ranhill Powertron.

Towards the end of 2005, the Federal Government approved the conversion of Ranhill Powertron’s 120MW open-cycle plant to a 190MW combined-cycle plant to benefit from the technical and economic efficiencies of such a conversion. The completion date stated in the revised PPA which Ranhill Powertron signed with SESB was March 2007. The project was finally only completely commissioned in 2008.

Parallel to obtaining Federal Government approval to convert its Powertron plant to a combined-cycle plant, Ranhill submitted an unsolicited proposal to the Federal Government for a new 190MW combined cycle IPP plant, to be located adjacent to its Powertron plant. The supposed benefits of this project were that it would enjoy economics of scale with the Powertron project and as such Ranhill would be able to offer the lowest IPP tariffs in Sabah. Yet again, the Federal Government gave its approval to the new Ranhill Tuaran IPP project. The completion date stipulated in Ranhill Tuaran’s PPA with SESB was July 2008.

Ranhill Tuaran ran into problems right from the start, facing problems with the private owners of its proposed power plant site, eventually leading to these landowners filing court action. Why did the Government approve this project when Ranhill could not even show proof of ownership of the proposed project site?

In an effort to prevent delays to the project, SESB stepped in and procured the land from the landowners and then leased it to Ranhill Tuaran. The company was further given an extension of time to complete the project by 2010. The first power plant unit for this project with a capacity of 65MW was supposed to be commissioned by November 2009 but progress on the ground has been slow and this date looks more like February 2010.

Although there has been and continues to be a public outcry over the performance and attitude of SESB, there seems to have been no commensurate change in the mindset of the top management in SESB. A recent statement from SESB stated amongst others that the utility was spending RM26 million to repair a 20MW diesel generator in Sandakan, thus making it seem as if SESB was reaching deep into its pockets to repair a generator which had broken down due to faulty technical parameters.

Little does the public know that the said generator is actually one of two diesel-fired gas turbines on board SESB’s power barge anchored off Sandakan. The generator had been in good operating condition but has incurred this much of repair expenditure not because of plant breakdown but because of mal-operation by SESB personnel. To further add insult to injury, the second unit on board this power barge has also broken down recently, again due to mal-operation and not technical reasons.

The protracted delays in all of the scheduled power projects mentioned earlier, and the poor operating methods employed to run its existing generators, will see SESB facing acute generation adequacy shortfalls in the short and medium terms. Whilst the lobbyists and UMNO/BN cronies play out their own power games within the corridors of Putrajaya, the ordinary, tax-paying rakyat of Sabah will be left facing more dark nights and hot, sweaty days and incalculable economic losses.

courtesy of "powerman"

人民公正党沙巴财政谢圣铭医生,足请国能有限公司的主席,首席执行员,以及全体董事会成 员自愿性,集体总辞,以对无法有效和彻底解决沙巴的电供问题负责。他透露“国能是一家总资产达678亿令吉的公司,2008年的营运额265亿令吉,净利 达26亿令吉。无法解决沙巴的区区数十兆瓦的短缺问题,是件可耻的事情”。


国 能的远景是“成为在国际间,能源和相关业务的领头企业”。国能的使命是“我们承诺竭尽所能,提供卓越的产品和服务”。谢圣铭医生指出“引述国能的远景和使 命在沙巴的情况,使叫人难堪和羞耻的”。他更建议国能,在放眼在相同领域的国际企业间扮演领头羊之前,请正视自己后院的窘境,以及沙巴人民苦难。

“ 沙巴作为一个全国最大的原油和天然气生产州,以及通过全国最大棕油生产基地加工生产生物材油的出口地,却被联邦政府严重的亏待,遭受不公平的待遇。很多时 候,沙巴人民的处境已经来到无计可施;一些非政府组织,甚至是政党,也惟有上街示威抗议的最后手段,毕竟,这个顽固的问题已经困扰沙巴30多年了!” 谢圣铭医生愤愤不平的细数沙巴被联邦政府长期忽略时,如此表示。

“记得30年前,当我还是个小孩时,我的家就频频经历停电的困扰;如今我 学成归来,30年后回到我的家乡和家人身边,同样的问题还在发生,没有停止过。营业各行各业的业者,更是活在水深火热之中,各个方面的成本因此高涨,更有 不能维持,面对亏损的!” 谢圣铭医生如此叙述。

courtesy of Dr.Roland Chia.


  1. Remove the UMNO/BN Government and vote in Pakatan Rakyat and our problems will all be solve.

    It's common knowledge that the China company awarded the project for the coal-power plant has already made certain individuals rich.So it's not surprising that the government and utility provider are now caught with their pants down.

    This is only playing with time,their hoping and praying Sabahans will eventually forget and then they will spin into action and commence the coal-power plant.

    The government are still believing that Sabahans are stupid.Whats even more disgusting is,when you're late in payments,your supply is disconnected,but when there's a power failure,they not only come out with the most idiotic reasons,they don't even bother to reimburse our losses,blatant bloody arrogance..!!

    The people are paying for our supply,it is your bloody duty to ensure no power disruption,and not give excuses.If you can't perform,get the hell out.

    I urged PKR Sabah to work hard and kick this corrupted UMNO/BN out for good.The people will support you.Kudos to the ever hard working newly appointed DOC,you are slowly but surely waking up the people.By the way,your blog is undeniably the voice of sabahans.

    Sabah Power.

  2. After years of merdeka, BN could not even provide the very basics of power supply and water to sabah people, not to mention law and order, whatelse can BN do for us? NOTHING other than miseries, poverty, inscurity and more corrupt regime. BN can even get away with MURDER. Based on Tiong-Ong saga, corruption and money politics are accepted culture to BN leaders, just tip of huge and ugly iceberg.