KUALA LUMPUR, July 11 — Putrajaya must explain 1 Malaysia Development Bhd’s (1MDB) recent acquisition of Jimah Energy, a DAP lawmaker demanded today, citing the independent power producer’s (IPP) poor cash flow to suggest an attempted bailout of yet another company seen as close to the government.

The deal, announced last Friday and expected to cost taxpayers RM1.2 billion, followed 1MDB’s questionable 2012 purchases of two other IPPs that have are also known to be politically linked to the ruling elite. The issue became major campaign fodder for the opposition in the last national election.

"Instead of promoting FDIs (foreign direct investments), 1MDB is now the major vehicle used in acquiring IPPs which is clearly against its mission and vision.

"In a period of one year 1MDB suddenly appeared to be the major power producer in the country which clearly contradicted to its vision to be a new source of growth for the country," DAP Taiping MP Nga Kor Ming told reporters in Parliament here.Nga claimed his own research shows Jimah Teknik, a subsidiary of Jimah Energy, has a negative RM367 million reserve. He further claimed that the company’s post-tax profit is only RM11.8 million.

Furthermore, the Jimah power plant is unique in its financing — the entire project is 85 per cent debt and 15 per cent equity.

“As a result, equity portion fork (sic) out is RM200 million for a RM6 billion power plant which is undoubtedly highly leveraged.

“Judging by the RM1.2 billion price tag and based on the company’s current profit, it will take more than 100 years for 1MDB to fully recover its investment. So is it another bailout by the BN (Barisan Nasional) government using public money?” Nga said.

The DAP lawmaker noted that 1MDB, a brainchild of Prime Minister Datuk Seri Najib Razak, was placed under heavy scrutiny for its acquisition of Tanjong Energy Holdings Sdn Bhd, a company owned by well-linked tycoon Tan Sri Ananda Krishnan, for RM8.5 billion and also the purchase of Genting Sanyen for RM2.3 billion.

Opposition leaders have in the past described the price tags on the two acquisitions as dubious and way above market value since the Purchasing Power Agreement (PPA) between them and Tenaga Nasional Bhd (TNB) will lapse by 2016.

Critics believe the soon-to-expire contracts between the IPPs and the government, following immense public pressure triggered by allegations of cronyism, should make it a non-viable investment for 1MDB.

“Why all of a sudden 1MDB is in a hurry to acquire major IPPs despite knowing some of the IPPs’ contract is under review by the government and is towards expiry of its concession soon?” Nga asked.

Prior to the noise made by the opposition, the country’s main energy operator TNB was forced to buy power from the IPPs at a high price despite the whopping subsidies the companies receive from the government.

This forced TNB to offset its high expenditure by increasing power tariffs. Opposition leaders and consumer groups, however, said it was unfair that consumers are forced to bear the brunt when the IPPs are enjoying huge turnovers from what is seen as a lopsided deal.

Nga said since the new deal involves public money, Putrajaya must explain its decision to acquire the three IPPs.

“Every single cent spent by the government must be counted for; failure to show accountability and transparency in public spending will render BN’s transformation agenda another sandiwara or political gimmicks,” he said.