Best business (ha)bits blues

Amidst intense nationwide controversy and negative connotation for YTL Power International Bhd.’s participation in the Project 4A Pasir Gudang combine cycle 1,000-1,400MW power station which was seen as self-contradicting MD Tan Sri Francis Yeoh’s faux pas of “Capital Cronyism”, the Group announced withdrawal from the project.

The Star story:

Published: Wednesday June 18, 2014 MYT 1:43:00 PM
Updated: Wednesday June 18, 2014 MYT 2:34:32 PM

YTL withdraws from Project 4A

 

KUALA LUMPUR: YTL Power International Bhd is withdrawing from a consortium which was given the go-ahead to develop a 1,000MW to 1,400MW combined cycle power plant in Johor.

It said on Wednesday it had pulled out of the power plant development, called Project 4A, because of “misconception” over the way the contract was awarded. The consortium includes SIPP Sdn Bhd and Tenaga Nasional.

“We are thankful to the government for having confidence in YTL Power, as part of the consortium, to deliver the project on a fast track basis.

“However, in view of the misconception over the project, YTL Power has decided not to participate in the project under the present arrangement to dispel any misgivings over the government’s commitment to transparency and good governance,” the company said.

To recap, YTL Power received a letter of award from the Energy Commission dated May 27, 2014 addressed to SIPP Energy, where YTL Power and Tenaga Nasional would be part of the consortium to develop the plan in Johor.

On May 31, the Energy Commission announced the conditional award was required to fast track the construction of the project to meet system requirements and that the terms of the award stipulated that the tariff must be comparable to the Prai CCGT tender exercise concluded in 2012 that was awarded to TNB.

YTL Power said the Energy Commission was transparent over the terms of the award which had been announced.

“Notwithstanding the Energy Commission’s clarification, there has, in recent weeks, been much misunderstanding and public debate over the award of the project,” said YTL Power.

It added that due to the misconception over the project, YTL Power decided to pull out of the project under the present arrangement to dispel any misgivings over the government’s commitment to transparency and good governance.

YTL Power also said it welcomed any opportunity to participate in the project or other new capacity requirements on a competitive basis and is prepared to do so on an accelerated timeline.

“We are confident that we will be able to offer competitive rates as demonstrated in recently concluded tender exercises,” it added.

**************

Shamefully, Francis Yeoh who had his ego on a pedestal when he had wagged the dog unequivocally had to swallow his pride. A really face-in-the-mud experience for getting his Group’s business empire actually owing to a series of opportunities of brushing shoulders with the high and mighty.

All and well. A really expensive lesson for the Yeoh family.

SIPP Power Sdn. Bhd. where YTL Power has majority control

SIPP Power Sdn. Bhd. where YTL Power has majority control

However, the lesson shouldn’t end here. The award of Project 4A from Energy Commission (EC) to SIPP Energy Sdn. Bhd. on a letter dated 27 May 2014 should be quickly withdrawn. So many members of the public expressed their displeasure on how EC awarded the project to a totally unknown company.

The justification is very simple. All awards from Energy Commission should be based on merits and competency, which something EC already decided for new power plant awards as far back as 2012.

On that note, one of the capital market firms believe that YTL Power might try to bid for the Project 4A and 4B if and when EC open it for tender.

NST story:

YTL Power withdraws from Johor job

19 JUNE 2014 @ 12:45 AM

THE Energy Commission (EC) has accepted the surprise decision by YTL Power International Bhd to pull out from a consortium that was awarded the job to build a power plant in Johor through direct negotiation.

However, the regulator, in a brief statement yesterday, has left open the prospect of awarding the lucrative Track 4A project to build a 1,000MW to 1,400MW combined-cycle gas turbine power plant in Pasir Gudang, Johor, to a new recipient via competitive bidding.

Late last month, the EC issued a letter of award to SIPP Energy Sdn Bhd, provided it includes YTL Power and Tenaga Nasional Bhd (TNB) as consortium members for the development of Track 4A.

TNB has yet to decide on its participation and has until July 25 to do so.

Subsequent to the direct award, there has been much public debate over the offer, composition of consortium and specified terms.

In response to the negative public sentiment, the EC said YTL Power’s parent, YTL Corp Bhd, had submitted a letter to the government on Tuesday declining the invitation to participate in the project.

“In view of the current situation, having conferred with all parties concerned, and in the interest of the project, we accept YTL’s decision to decline the invitation,” the EC added.

YTL Power, in its statement yesterday, said it had withdrawn to “dispel any misgivings over the government’s commitment to transparency and good governance”.

The management, however, maintained that it remains keen to participate in Track 4A through a competitive bidding environment, RHB Research said.

Analysts, meanwhile, are still placing their bets on YTL Power to drive its power business locally.

“I believe YTL Power’s decision to pull out was made based on public and shareholders’ interest. At the end of the day, I think only (the group’s chief) Tan Sri Francis Yeoh knows the real reason and intention,” Mercury Research head Edmund Tham told Business Times.

Another analyst believes that if a tender is called for Track 4A and Track 4B, YTL Power will not hesitate to bid.

RHB Research said YTL Power’s decision to pull out from the project will help ensure that TNB’s long-term interest is taken care of.

“This should encourage a competitive operating environment, which can ensure efficiency in power generation costs among the existing independent power producers,” said RHB Research analyst Kong Heng Siong.

The firm has revised downwards its fair value for YTL Power to RM1.54 from RM1.71 following the announcement.

It, however, kept its “neutral” rating with a target price of RM1.54.

YTL Power closed 1 sen lower yesterday at RM1.47 a share, with 5.88 million shares traded.

*****************

YTL Power’s withdrawal at this stage is probably a tactical retreat.

We are not sure who within the key personalities within SIPP Energy Sdn. Bhd., a company which was formed in 2012, have the necessary qualifications, experience and exposure in the energy and power generation business and operation. That would be the fundamental factor on why SIPP Energy shouldn’t be awarded the project to begin with.

Shareholders of SIPP Energy Sdn. Bhd.

Shareholders of SIPP Energy Sdn. Bhd.

Fourth Prime Minister Tun Dr. Mahathir Mohamad urged EC to re-tender the project, and offer them on a ‘beauty contest’ to a selected pre-qualified power generators which have proven in their operations and business to bid for Project 4A, applying the best business practices.

On the same note, EC should also review all power purchase agreements between independent power producers (IPP) and TNB. Especially, YTL Power’s Paka power plant, which was the nation’s first IPP deal.

This is to ensure EC getting the best deal for the supply of power to TNB, which eventually would affect the rakyat.

Sultan Johor, Tunku Mahkota Johor, MB Johor, DUN Johor Speaker and the ADUNs

If HRH Sultan Ibrahim Ibni Sultan Iskandar wants to be actively in business, as proven in this case, then best business practices should apply. Otherwise, the impression would be that any companies or businesses with HRH Sultan Johor’s direct or indirect interests are obtained from clout and influence of the sovereignty position as a Ruler.

The Federal Constitution provided a special role and position for a Ruler under the separation of power principle in the Constitutional Monarchy democratic system where the government is formed by the control of the Parliament. That, which is the fundamental element when this nation was found and given birth to as a sovereign state, should be preserved in principle and practices.

Published in: on June 19, 2014 at 15:00  Comments (17)  

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  1. There are 7 generally accepted characteristic of good governance;

    1. Discipline
    – Means that the senior management should be aware of and committed to adhere to behavior that is universally recognized as correct and proper.

    2. Transparency
    – The measure of how easy it is for outsiders to find out and analyze a company’s financial and non-financial fundamentals. Companies should make this information available in timely and accurate press releases to give outsiders a true picture of what is happening within the company.

    3. Independence
    – All decisions are made objectively with the best interest of the enterprise in mind and without any undue influence from large shareholders or an overbearing chief executive officer. This requires putting in place mechanisms such as having a diversified board of directors and external auditors to avoid any potential conflict of interest.

    4. Accountability
    – Those who make decisions in a company must be held accountable for their decisions and mechanisms must exist to allow effective accountability. In public companies, investors hold individuals running the company accountable for their actions by carrying out routine inquiries to assess the actions of the board.

    5. Responsibility
    – Means that the management must be responsible for their behavior and have means for penalizing the mismanagement. It also means putting in place a system that puts the company on the right path when things go wrong.

    6. Fairness
    – Company must be fair and balanced and take into the account the interest of all of the company’s stakeholders. In this sense, the rights of each of the groups of stakeholders must be recognized and respected.

    7. Social Responsibility
    – A well-managed company must also be ethical and be responsible with regard to environmental and human rights issues. As such, a socially responsible company would be non-exploitative and non-discriminatory.

    Wonder how many among those listed above applies to the said company, and if it does to what extend?

  2. I dont quite believe YTL did that… Read Kg Chubadak too…

  3. Nobody with an iota of commonsense will believe that the decision to award Track 4A to SIPP was made by the EC. The EC report to Energy Minister who report to PM. Your guess as who made the decision is a as good as mine. They have been silence on this issue. YTL might be squeezing their balls.

  4. Many ways about getting thing done , with such exuberant deal and secured partnership ,YTL would not just simply pull off.

    Biduk lalu kiambang bertaut , Melayu kan mudah lupa.

  5. YTL withdrew but said it was interested to bid even if it’s on an open tender basis. It has the relevant experience, sure it is will pass any pre-qualification exercise that should be done for all interested parties, like suggested by Tun Dr Mahathir.

    And the price or the financial part of the bid and the proposed completion period are factors that may enable them to win the bid. Francis Yeoh was not stupid when deciding to withdraw. He was stupid when opening his mouth on crony capitalism the way he did.

    But not only that. The presence of Sultan Johore in the project was also a factor leading to the public making a noise on the entire affair. Having shares alone was not the real problem. “Being proposed” having powers like in the original draft of the Johore Housing Board Bill was the straw that broke the camel’s back – whoever it was that did the proposing. It gave the impression to people that he also had “influence” in the “conditional offer” of the IPP project to the three-party consortium. It certainly affected the sentiment of the rakyat on the Sultan. The rakyat sure would like him to stick to his position as a constitutional monarch.

    The Energy Commission and the Ministry concerned were unwitting in making such a decision. Now that many parties have weighed in on the matter, including Tun Dr Mahathir, they must do it on an open tender basis. Call for pre-qualifications of those interested in bidding. Open it to international parties as well, as the project is huge – RM3 billion. After the P/Q, invite those pre-qualified to submit bids.

    Invite at least half a dozen of them. There will be that many, and more, if international bidders are also allowed to bid. No reason why not. It’s the rakyat’s money and interests they are dealing with.

    • Pwincess also thinks that this is a just a tactical move, a step backward now by YTL in order to take three steps ahead later on.

      The funny thing is:

      “However, in view of the misconception over the project, YTL Power has decided not to participate in the project under the present arrangement to dispel any misgivings over the government’s commitment to transparency and good governance,”

      What misconception? The project was awarded directly without competitive bidding, no merit and even The Edge (the sole beacon for promoting business transparency, integrity bla-bla-bla in Malaysia) went all the way out to defend the direct award to YTL as not being a sweet-heart deal. Such a blatant display of hypocrisy by The Edge. What? You think YTL is doing it for national service? That’s very noble for a company that only operates 15% of its business in Malaysia because someone ‘dislikes kow-towing to the PM’.

      Oh my Gucci, Pwincess nearly muntah semula breakfast bila dengar semua tu. Again, is someone actually minum air ketum secara berlebihan nih? Not so long ago, someone said Malaysia need to do this, need to do that to move forward in business, and gave an impression that the current ‘crony’ problem forced that someone to operate 85% of business in three other countries which do not require that someone to ‘kow-tow to the PM’, even after a project was secured. If that is the case, jangan terima la that Project “not sweet-heart deal” Track 4A via direct award IN THE FIRST PLACE!! Bila kena dedah, still ada hati nak tunjuk baik? Misconception la sangat!

      I agree that the project should be opened to international bidders so that the rakyat will get better deal for money. After all, I’m sure the government also have no problem with such a suggestion considering that they want Malaysia to be seen as investor-friendly. It will also be a good exercise for Malaysians in the light that we might join the TPPA, so we need to be competitive la kan, melentur buluh biar dari rebungnya, merobohkan Kg. Chubadak biar sebelum puasa dan raya. Tak begitu?

      If we can allow numerous foreign investors to pour billions into Johor at the expense of local enterprises/businesses sbb gian sangat nak tarik pelabur asing even with the detrimental prospect in the long term for Malaysia, especially Johoreans who might have to jadi peneroka tanah baru sebab tak mampu beli rumah kat situ (then dah duduk 50 tahun tanah peneroka, ada court order, lepas tu still dituduh setinggan dan rumah kena bakar macam kat Kg. Chubadak) simply sebab gian sangat dgn foreign investment. So what’s wrong if we open the power generation business for competitive bidding by foreigners. Syarikat besar dengan 85% operasi di tiga negara dan yang seronok nk sokong ‘the government’s commitment to transparency and good governance’, for sure will not have any difficulties to prove their weight in gold by competing against international bidders.

      Ok, sampai sini saja. Pwincess penat la these last few weeks having to deal with all this kind of news. I’m off to a holiday abroad this weekend via KLIA. Tp Pwincess naik teksi to KLIA, tak larat la nak dengar iklan bodoh pasal internet in schools dlm ERL/KLIA Express. Semua cikgu cakap itu indah khabar dari rupa.

      Have a good weekend everyone!!

      • Bon voyage, Pwincess.

        If you are heading for US, don’t hear Iraq news there. If to EU, don’t watch Ukraine news. If to UK, don’t listen to football talk – they want to kill the Liverpool forward Suarez for two-goaling England in Brazil.

        I wanna go outer space where only hissing sounds may be heard, not the kelapak kelepuk and berdentam dentum of mankind in all corners of planet earth. But Virgin Airlines Richard Branson’s flight to Mars not ready yet. Well, well ..

        Meanwhile, will do the walloping of the ungrateful ingrates (double whammy) here.

      • Dear Zen

        Thanks for your kind wishes. I’m not leaving KL for all those places, just somewhere nearby.

        Why would they want to kill Suarez? He’s soooooo hot, way hotter than Wayne Rooney. I’m sure they’ll accept defeat with grace unlike that Al-Juburi guy.

        If Virgin Galactic’s maiden flight is to Mars, Branson should be the first one to go and he shouldn’t come back to Earth. I cannot stand that guy ever since he spearheaded Virgin’s boycott of the Dorchester Group Hotels belonging to the Brunei Investment Agency, simply because Brunei adopted Hudud recently. Any business related to Virgin is in my Blacklist. Orang putih kat mana pun semuanya hipokrit tahap gaban.

        Yes, please whack those people whilst I’m away. BTW, can you actually slap that Khalid Gereja dengan virtual selipar jepun? Along with three other PAS MPs. Lebih sudu dari kuah pulak diorang tu, dasar tak sedar diri. When I get the same pair of gorgeous Louboutins like Fazura’s from my trip, I akan sepak mulut si Khalid tu jugak.

        Thanks Zen,
        Pwincess.

    • Back in the day, wasn’t it during Tun Dr M’s tenure that the whole IPP thingy came about?

      What were the criteria for selecting that first batch of IPPs?

      And who negotiated their PPAs and presented TNB with a fait accompli?

      I don’t recall the TNB union being indignantly vocal then.

      So, it’s a tad rich that YTL gets hantam-ed now when, back then, no one uttered a peep of protest over IPPs.

      • During TDM’s time, there were big projects that were tendered out – those interested were pre-qualified first, those deemed qualified were invited to submit tenders, including international contractors, some bidding jointly with local contractors.

        Can you name the project(s) during TDM’s time that were done on straight-negotiation basis, and provide some reference to convince us so?

      • All the first generation IPPs were given out on negotiated basis. No tender were ever issued. Those given were MM’s cronies. Now he is saying all should be on competitive basis. Kubur calling kot?

      • Really, Zen – you can do better than that, surely?

        How many of the first batch of IPPs had relevant prior experience and expertise in the electricity generation industry?

        Wasn’t all the relevant experience and expertise in TNB at the time?

        So, why was TNB “shafted” when it was the national electricity generating and distribution organisation?

        Couldn’t TNB have been restructured and reorganised as how the government did later with MAS?

        AirAsia came on the scene and the MAS unions and sympathisers made a big hoo-hah about “unfair” competition.

        Where were the TNB employees union and TNB sympathisers when the IPPs came on the scene?

        Different times, different rules?

      • You might get kinchin-ed if you try to sound high and mighty in coming out with sarcastic remarks without giving the project names and references as asked for by Zen. And only asking questions pretending you know everything without even attempting to substantiate the points you were trying to make.

        You must realize that not everybody here has all the facts as, really, no one is a Mister Know-All. And when anybody wishes to state opinions – in question form, whatever – the facts should be provided in support of such opinions. That’s in the nature of normal, rational discussions.

        In the absence of facts to support one’s opinions, those opinions – or questions – will remain opinions. And, as has been pointed out here in the past, your opinion is as good as the other guy’s.

        Here is a set of questions that can counter your questions:

        What made you think the first batch of IPPs had no “relevant prior experience and expertise in the electricity generation industry”?

        Ever heard of the attempt to encourage Malaysian businesses to venture into new fields like construction technology as in the Dayabumi Complex, car manufacturing as in the Proton venture?

        What made you think your idea of “TNB .. restructured and reorganised ..(like) MAS” was workable or the best idea? What qualifications and credentials do you have to be saying so?

        What made you think TNB employees union and TNB sympathisers must react the same way as the MAS unions and sympathisers did when AirAsia came on the scene?

        Same industry, same needs?

      • Hahaha kinchin, “why was TNB “shafted” when it was the national electricity generating and distribution organisation”?

        MAS was/is the national airline, expert at operating airplanes, doing maintenance and repairs as well, so MAS should build their own airplanes?

      • Well, Isa – I would ask you the same question: what qualifications and experience do YOU have to be able to rebut my views?

        It’s a 3rd grade debating tactic – instead of giving answers, do a snow job by raising extraneous issues.

        So, I repeat – what cardinal sin did TNB commit that IPPs had to be brought in?

        Why is Tun Dr M waxing sarcastic about YTL when it was given the “imprimatur” in the first round of IPP awards?

        “National service”?

      • It’s now obvious that you do not have, and cannot get, the sense of “normal, rational discussion”.

        Lookee here, man, Big Dog wrote a piece pointing out the bad habits of people like Francis Yeoh. You dispute some of what is said in there by just stating your opinions through asking questions, no facts or references even after you were asked for. When pointed out, you still ask questions instead of substantiating or justifying your opinions. What the …

        Didn’t anybody teach you and your DAP/ Pakatoon kind that if you want to dispute anybody, if you want people to believe what you say – your opinions – you should substantiate and justify them, and it’s you who should provide the facts and references asked for? That it’s nonsensical to just state your opinions and expect readers to find out the facts and references for you? It’s stupid – even anarchistic – isn’t that?

        And when told that your questions (instead of facts and references) could be countered by a series of similar questions, you now say “I would ask you the same question: what qualifications and experience do YOU have to be able to rebut my views?” – those unsubstantiated and unjustified views. Instead of answering my question on your qualifications and credentials, you ask for mine? Come on man, you were the one who disputed what was written in BD’s post, and, refusing to substantiate and justify your opinions, you should state your qualifications and credentials so that some readers may consider your “opinions”.

        Then, to cover your shame, you resort to offence as a form of defence, you go so low as to accuse others of “3rd grade debating tactic”. Still no facts and references to the “question-kind of views” you gave in the first place. What utter rubbish.

        Having told you, “Ever heard of the attempt to encourage Malaysian businesses to venture into new fields like construction technology as in the Dayabumi Complex, car manufacturing as in the Proton venture?”, you can’t even see that the IPP was a similar case and that my answer was in that question, done to mimic your style and as a sarcasm to you. Not only you don’t understand sarcasm, now you doggedly repeat your questions.

        I’ve had it with you and the likes of you DAP/ Pakatoon buggers. You sound like another bloke coming in here with a different name before, giving only opinions without substantiation or justification. After being repeatedly told that the opinions of readers here are as good, if not better than, his, he disappeared, and now similar comments appear under your name.

        Comments from you and the likes of you may from now on be treated only with disdain and rancour.

  6. Sirs, If this infamous/famous multi-multi-billionaire is as holy holy and honest honest as he claims to be, THEN IT IS HIGH TIME HE SEARCHES HIS CONSCIENCE AND HOLISTICALLY (I COPY) RETURNS THE FIRST MONOPOLY WHICH THE FEDERAL GOVERNMENT GAVE HIM WITH THE TAX FREE 22% GUARANTEED PROFIT SUBSIDISED BY THE RAKYAT. This gesture will be honourable and significant since he now ESCHEWS HIS PAST as it is alleged by selling CLUB MEMBERSHIPS WITHOUT THE CLUB LAND TO INNOCENT AND NAIVE INVESTORS ! TWO WONGS DO NOT MAKE A RIGHT !


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