YTL “Capital Crony”-free in the IPP (Inducted Palace Power) game, Continuum?

Shareholding of SIPP Power Sdn. Bhd., where YTL International Power Bhd. is the majority shareholder and partner is SIPP Energy Sdn. Bhd.

Shareholding of SIPP Power Sdn. Bhd., where YTL International Power Bhd. is the majority shareholder and partner is SIPP Energy Sdn. Bhd.

YTL International Power Bhd. should explain and clarify in full disclosure, based on principles of transparency and best business practices about its majority holding in the company called SIPP Power Sdn. Bhd. SIPP Energy Sdn. Bhd. received a letter from the Energy Commission (EC)very recently  for the development of the new Pasir Gudang power plant.

SIPP Energy is the 30% shareholder in SIPP Power. Search in Suruhanjaya Syarikat Malaysia (SSM) shown that HRH Sultan Ibrahim Ibni Almarhum Sultan Iskandar, Sultan Johor is the majority (51%) shareholder of SIPP Energy.

List of Directors of SIPP Power Sdn. Bhd.

List of Directors of SIPP Power Sdn. Bhd.

List of Directors of SIPP Power Sdn. Bhd. (Cont.)

List of Directors of SIPP Power Sdn. Bhd. (Cont.)

Majority (3 out of 5) of SIPP Power Directors are siblings of YTL International Power Bhd. Managing Director Tan Sri Francis Yeoh and executives within the YTL Group.

Francis Yeoh currently is the market talk, where his “Capital Cronyism” statements recently which he said to about 200 participants of a forum organised by the Performance Management and Delivery Unit (PEMANDU) of the Prime Minister’s Department. It invited overwhelming negative reaction, considering that he contradicts his own company’s history and current business operations.

Probably he would like to also explain the proposed contract to produce power from this combined cycle power plant which is believed to be for 21 years, from the scheduled date of commercial operational which was reported to be in June 2018.

Search on SSM portal about SIPP Power Sdn. Bhd.

Search on SSM portal about SIPP Power Sdn. Bhd.

In would be interesting to know what is the formula and rate for the power produced by this plant, which would be undertaken by TNB Distribution. Considering this is direct negotiated deal, it is expected that bigger transparency would be demanded from the Malaysian public.

Of course, in the bigger scheme of things the relationship, role and structure of SIPP Power Sdn. Bhd. to the new Pasir Gudang combine cycle power plant aka Project 4A, since it is believed the EC letter was sent to SIPP Energy Sdn. Bhd. and was expected to reply within 14 days.

Again as we stated yesterday, a lot at stake in this.

Published in: on June 5, 2014 at 23:59  Comments (12)  

YTL “Capital Crony”-free in the IPP (Inducted Palace Power) game?

The commercially 'crony-free' successful entrepreneur Tan Sri Francis Yeoh

The commercially ‘crony-free’ successful entrepreneur Tan Sri Francis Yeoh

TNB disclosed to Bursa Malaysia that the public listed GLC which primary activity is power generation and distribution yet to decide to go with YTL Power-SIPP Energy for the development of Project 4A power plant in Pasir Gudang.

The Star story:

Published: Tuesday June 3, 2014 MYT 12:00:00 AM
Updated: Tuesday June 3, 2014 MYT 6:57:25 AM

TNB yet to decide on Johor project

PETALING JAYA: Tenaga Nasional Bhd (TNB) has yet to decide on jointly developing Project 4A, a power plant with a capacity of between 1,000 and 1,400 MW to be constructed in Pasir Gudang, Johor, scheduled to be operational in June 2018.

In a statement to Bursa Malaysia yesterday, TNB said it had received a conditional letter of award from the Energy Commission (EC) and had been given until July 25 to respond to the offer.

“TNB is currently evaluating the offer as well as TNB’s role in the project. TNB shall make further announcements once a decision has been made,” the statement said.

Meanwhile, in a separate announcement, YTL Power International Bhd confirmed that it had received a letter of award from the EC for the development of a 1,000-MW combined-cycle power plant.

The proposed combined-cycle gas turbine (CCGT) power plant, which is a fast-track development known as Project 4A, has been awarded to SIPP Energy Sdn Bhd, with the participation of YTL Power and TNB as consortium members. It is reported that SIPP Energy is linked to the Sultan of Johor.

The inclusion of all three parties under a consortium and the award, the EC said, was based on their ability to offer “competitive rates” in the recently concluded tender exercise. The EC, however, did not disclose any details on the tariff and shareholding structure of the consortium.

While analysts are positive on TNB securing Project 4A together with other parties, they opined that it was another step backward in the EC’s commitment to reforming the power industry.

“Although TNB has been a beneficiary in the award of Project 4A, the process of direct negotiation is another step backwards in the EC’s commitment to reforming the power industry with an emphasis on transparency and meritocracy,” PublicInvest Research said in a report.

StarBizWeek had reported last week that the new power plant would be awarded based on a direct negotiation basis, and that the benchmark for Project 4A was the 34.7 sen per kilowatt-hour (kWh) tariff of the new 1,071-MW Prai CCGT power plant.

On the same day, the EC offered “a conditional award” for the development of a new power plant in Johor to a consortium made up of all three prominent bidders of the project.

PublicInvest pointed out that all eyes will be on the upcoming tariff review in mid-2014. It said if a tariff review failed to materialise, then TNB might need to absorb the extra costs incurred by the increased gas generation and higher liquefied natural gas prices of RM45 per million metric British thermal units (mmBtu) as opposed to RM41.68 per mmBtu provided in the last tariff revision in December 2013.

“We estimate the project will cost between RM2.5bil and RM3.5bil, based on the cost of the Prai CCGT power plant which TNB won in 2012. While the tariff has not been disclosed, the EC has stated that the award was conditional upon a comparable levelised tariff, with the Prai CCGT’s winning bid of 34.7 sen per kWh as reference,” it noted.

Nonetheless, PublicInvest believes that earnings contribution to TNB, while positive, will not be significant, given the joint-venture structure of the project and TNB’s generation capacity which will be close to 15,000 MW by 2018.

RHB Research said the announcement came as a surprise, given that the EC chairman Datuk Abdul Razak Abdul Majid had earlier reaffirmed that the award of Project 4A would be done on an open bidding practice.

“While this came as a surprise, we believe the inclusion of TNB as part of the consortium should help to ensure the interest of the national utility company,” it said.

Nonetheless, it said the latest decision came after the EC’s move to bring forward the operational date of Project 4A to 2018 from 2020. “To accelerate the implementation, we deem this a necessary move,” the research house said.

RHB Research estimates the project’s internal rate of return (IRR) at around 10%-12%, against the usual high single-digit returns under an open bidding environment.

Meanwhile, Hong Leong Investment Bank Research was positively surprised with the inclusion of TNB into the equation, which acts as the check-and-balance party to ensure the new power purchase agreement (PPA) only earns a justifiable return on investment or equity.

It noted that the IRR for the Prai CCGT is expected at around 8%, substantially lower than the first-generation PPAs’ of more than 15%. It added that based on an IRR of 8%, the new PPA is expected to provide a value-add of RM240mil.

“However, no detail of the equity stake breakdown was provided. Should we assume similar stakes by each party, then TNB and YTL Power will enjoy an additional RM80mil (in revenue) or 14 sen per share and 10 sen a share, respectively,” it said.


It is very interesting that the question of  “EC’s commitment of reforming the power industry with an emphasis on transparency and meritocracy” has been mentioned in this report. It is as if the winner of the project got it through open tender.

The award of this project is believed was not made through tender but instead negotiations.

NST story:

28 May 2014| last updated at 12:51AM

Direct negotiations for new power award?


1,400MW JOHOR PLANT: Talk is rife that YTL Power-led consortium will get project

THE Energy Commission is expected to award either the Track 4A or 4B power plant projects via direct negotiations and not through competitive bidding, as has been the practice since 2012.

An industry source said speculation is rife that a consortium led by YTL Power International Bhd will bag the multi-billion ringgit project.
The source said the commission is expected to release a letter of award to a private company for the contract to build a 1,400 megawatt closed-cycle gas turbine power plant in Johor, to be completed in 2018.
“The commission has also told grid owner (Tenaga Nasional Bhd) to do whatever necessary to expedite the completion of the southern line 500-kilovolt link.”
The yet-to-be completed southern link, which links Lenggeng in Negri Sembilan to Yong Peng in Johor, will provide the interconnection between the new power plant and the national grid.
“Although the commission was told officially last year that the southern link can be completed by December 2019, it now wants an earlier completion date.”
Its officials could not be reached for comments.
Meanwhile, a source said the whole development is untenable as TNB definitely cannot sign the power purchase agreement while knowing that the southern link may not be completed before the new power plant starts generating electricity.
“If TNB were to do that, it would end up paying capacity payments for power that it couldn’t evacuate.”
Capacity payments are payments made by TNB to independent power producers for the extra power generated irregardless if it is used, or not, by consumers
The new development is in stark contrast with the commission’s previous stance, which, in late October 2012, introduced a competitive and transparent tender system in commissioning new power plants in order to promote a more efficient energy sector.
Its chairman Datuk Abdul Razak Abdul Majid had said earlier this month that multi-billion ringgit power plant projects under Track 4A and 4B will be awarded via competitive bidding.
So far, the commission has awarded contracts to build Track 1, 2, 3A and 3B through such a bidding process.
Business Times last month reported that preparation works are in progress for the construction of Track 4A and 4B.
The construction, which will cost a combined RM8 billion to RM10 billion, was expected to start by the middle of next year.
Read more: Direct negotiations for new power award? – Today’s Paper – New Straits Times


The what is interesting is that owner and Managing Director of YTL International Power Bhd. Tan Sri Francis Yeoh  is aloud talking about “Crony Capitalism” and need not to “Kowtow to Prime Ministers” in their business operations the United Kingdom, Australia and Singapore.

The Malay Mail story:

Crony capitalism in Malaysia has to go, son of YTL founder says (VIDEO)


UPDATED: JUNE 03, 2014 04:15 PM

KUALA LUMPUR, June 3 — Malaysia has to free itself from the constraints of “crony capitalism” and stop racial and religious rhetoric in order to compete on the global stage, business tycoon Tan Sri Francis Yeoh said today.

The group managing director at YTL Corporation and eldest son of founder, billionaire Tan Sri Yeoh Tiong Lay said 85 per cent of YTL’s business are in Britain, Singapore and Australia because these countries do not tolerate corruption, practice meritocracy and stand for the rule of law.

“For example in Singapore, we own a third of Singapore’s electricity, there is no subsidy of any kind, there is no cronyism of any type.

“The good thing about these three territories, I don’t have to kowtow to the prime minister before I do deal(s), I don’t have to see them even, even after I’ve won the deal.

“I turn west because of this transparent, coherent regulatory framework,” he said during Pemandu’s Global Malaysia Series at the Securities Commission.

Yeoh said the country’s leaders have to get rid of all racial and religious rhetoric, and focus instead on the economy to improve the lives of Malaysians.

As far as non-Bumiputera small and medium enterprises (SME) go, he said they “absolutely have no chance” to even fight “for the crumbs” as they are already at the low end of the food chain.

“I don’t think you’ll have a chance. Even in Petronas contracts, if (you are) a non-bumi you won’t get to do anything, for example,” he said in response to a question from the audience.

Yeoh said the SMEs would have to rethink their business strategies, be innovative, and use more technology and try to get global exposure.

“Like me, I had to survive so 85 per cent of my business (is) outside, I had to invent a lot of the stuff, for my own self-interest, to make sure I survive.

“I don’t depend on the largesse of the government. I can’t, SMEs more so,” he said.

Despite that, Yeoh said it is up to the prime minister to do away with “crony capitalism” for the future of the country.

“I think this crony capitalism stuff has to go. It’s 20 years old this idea, I think we should replace it with new, fresh, truthful idea.

“Now Malaysia demands a leader in Najib… to really be a Churchill, or be a Tun Razak like his father,” he said.

When asked about how his “close links” with former Prime Minister Tun Dr Mahathir Mohamad had contributed to YTL’s successes, Yeoh denied being the latter’s “crony” and credited the company’s achievements to “innovation”.

“At that time… I think up till today, almost 21 years later, people still think I’m a crony of Mahathir’s.

“People think I’ve got a very fat, lucrative contract from Tenaga, [but] I think it’s about time the truth comes out that we actually were very innovative,” he said.

The 59-year-old said when Dr Mahathir introduced YTL as the first independent power producer (IPP), the then prime minister had already been pushing for privatisation.

Yeoh claimed to have given the idea to Dr Mahathir after the major national blackout in 1992.

“We made profit from day one by this incredible innovation of inventing the bond market, inventing IPC (infrastructure project company) listing, financing it in ringgit that indirectly made Malaysia able to withstand financial crisis,” he said.


Francis Yeoh is rather arrogant when he said this “I don’t depend on the largesse of the government”.

The “Thirteen Million Ringgit Plus” question here is that did YTL Power exercise best business practices and transparency in their bids for these new power plants from the Energy Commission (EC)?

YTL Power is controlled by Non Bumiputra owners and executives. Against Francis Yeoh’s own statement, the company which is the bigger partner in the consortium obtained an award from EC for Project 4A.

YTL Group Founder and Executive Chairman Tan Sri Yeoh Tiong Lay with HRH Sultan of Selangor and HRH Raja Perlis

Francis Yeoh should ensure that YTL Power refrain from bidding all these packages of new power plants from EC, since he felt very strongly against “Capital Cronysim” and the policy for Bumiputra preferred concessions and awards by the Federal Government. After all by his own admission, 85% of YTL Power business comes from outside Malaysia where it is more market economy based on “Innovation and use more technology”.

Yet, YTL Power partnered with totally unknown SIPP Energy Sdn. Bhd., which has no track record in power generation, distribution, transmission nor management to bid for this project.

Datuk Daing Malek Daing A. Rahaman, Director and shareholder of SIPP Energy Sdn. Bhd.

What is more interesting, search with Suruhanjaya Syarikat Malaysia shown that the majority shareholding of SIPP Energy is held directly by HRH Sultan Ibrahim Ibni Almarhum Sultan Iskandar, Sultan of Johor (51%) and where else the other directors are the remaining shareholders (each 24.5%). The director is Dato’ Daing Malek Daing Abdul Rahaman, someone who is believed to be closely linked to the palace.

Search on SIPP Energy at SSM portal

Search on SIPP Energy Sdn. Bhd. at SSM portal

The officers of SIPP Energy

The officers of SIPP Energy Sdn. Bhd.

Shareholders of SIPP Energy

Shareholders of SIPP Energy Sdn. Bhd.

It is unsure what is the qualification for SIPP Energy to bid and what were the merit points that the consortium be awarded this strategic project. Right before Kembara Bumi Suci, Datuk Rocky blogged about SIPP Energy-YTL Power lost to 1MDB for the Project 3B coal fired power plant.

So what is this really about when Francis Yeoh proudly said “I think this crony capitalism stuff has to go. It’s 20 years old this idea, I think we should replace it with new, fresh, truthful idea”?

Prime Minister Dato’ Sri Mohd. Najib Tun Razak with YTL Group Managing Director Tan Sri Francis Yeoh providing endorsement to the launch of a YTL product

Probably as a PLC, YTL International Power Bhd. would want to explain the contradiction of Tan Sri Francis Yeoh’s statement which was published in The Malay Mail and The Star report about the consortium which received an award letter from the Energy Commission to develop and build the RM3.5 billion power plant in Pasir Gudang.

A lot is at stake here. Especially, perception and eventually, the truth.

Published in: on June 5, 2014 at 03:30  Comments (22)