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KUALA LUMPUR, June 19 — Investors have responded negatively to the scarcity of details regarding Tenaga Nasional Bhd’s (TNB) buyout of 1Malaysia Development Bhd’s (1MDB) power assets, sending the utilities share value to an eight-month low yesterday.
TNB shares fell as much as 6.5 per cent yesterday, before closing at 4.3 per cent lower than the start of the day.
The decline was also sufficient to push the FTSE Bursa Malaysia KLCI down by half a per cent.
The drop mirrors a similar selloff by investors when news that TNB would take over 1MDB’s independent power project first emerged in May.
Yesterday, Energy, Green Technology and Water Datuk Seri Maximus Ongkili announced that the proposed takeover of 1MDB’s 3B power plant has been approved by the Cabinet.
According to the minister, there was no open bidding for the independent power producer (IPP) project as there is a priority to finish the delayed project and Putrajaya has deemed TNB capable of achieving that.
Ongkili also confirmed that TNB has requested for a “small revision” to the power tariff as the project was already six months late and the exchange rate has already been changed since.
Project 3B is a 2,000MW coal-fired power plant adjacent to the Jimah Power Station in Negri Sembilan, another power project in which 1MDB has a 75 per cent stake.
The RM11 billion project was awarded to the consortium known as the Jimah East Power Sdn Bhd (JEP) that is co-owned by 1MDB and Mitsui Corporation Limited on June 3, 2014.
The 3B project is considered the “crown jewel” of 1MDB’s 15 power and desalination plants, and was supposed to be the cornerstone of its long-delayed power assets IPO.
1MDB’s liquidity prevented, however, the project from being built.
The power IPO will also be called off, news agency Reuters reported citing sources, in favour of outright sales.
The sale of the 3B project also comes at a time when 1MDB is liquidating its assets in order to resolve its RM42 billion in debt that prompted former prime minister Tun Dr Mahathir Mohamad to attack Datuk Seri Najib Razak.
The state-owned strategic investment firm is currently the subject of an investigation by the Auditor General’s Department and in line for further scrutiny by Parliament’s Public Accounts Committee.