SEDA fails to answer the key questions posed

http://tonypua.blogspot.com/

* Note: Please refer to clarification statement below (13/11/13)

Media statement by Nurul Izzah Anwar and Tony Pua Kiam Wee in Kuala Lumpur on Monday, 23^rd July 2012:

SEDA fails to answer the key questions posed

In a statement issued last Friday and advertorials taken in most mainstream newspapers on Sunday, the Sustainable Energy Development Authority (SEDA) said it "regrets the accusations and allegations by Nurul Izzah Anwar and Tony Pua and is of the view that such allegations are clearly unwarranted and unjustified."

However, in defending its award of 32.4% of the solar energy quota to 12 companies owned by Suzi Suliana binti Mohd Sidek and her business partners, SEDA has raised further questions, including clear-cut non-compliance with its own application criteria and license requirements.

1. Failure to meet pre- and post-application financial requirements

SEDA argued that "companies that apply have no way of knowing whether they would succeed, so it would be unfair to expect them to make huge investments beforehand... Most of the companies that participate in the [Feed-in Tariff] programme formed a special purpose vehicle and some with RM2 paid-up capital because there is no guarantee they will get the quota."

The above statement comes as a complete shock as the application form which I have forwarded to all the press last week, very specifically states that the companies must have secured financing for the project. In fact, the form states that the Applicant's bank account statement must show "a credit balance of at least 20% of the total capital cost of the renewable energy installation".

Given that every megawatt of solar energy requires at least RM8 million in investment, Suzi Suliana's companies secured 45.9MW of Feed-In Approvals (FiA) which will require investments of RM367 million. A 20% "credit balance" would require Suzi's companies to show at least RM73 million in the company accounts. We challenge SEDA to state that Suzi's companies have fulfilled the RM73 million cash balance requirements for the application by the 12 successful companies.

It was the further clarified by SEDA that "the successful applicant must have a minimum RM200,000 in paid-up capital or two percent of the project cost, whichever higher". Otherwise SEDA said the failure to meet any requirement or milestone would result in a revocation of the FiA.

This is where SEDA's explanations shot itself in the foot and raised more questions than answers. If the applicant must have a minimum of RM200,000 paid up capital after successfully receiving the FiA, why is it that the latest information from the Companies Commission (SSM) showed that at least 9 of the 12 successful companies had paid up capital of only RM100 more than 6 months after they were awarded?

2. Failure to meet critical pre-application technical requirements

The Renewable Energy Act (2011) – Technical & Operational Requirements Rules which was gazetted in November 2011, specifically stated that "an eligible producer who proposes to construct... and connect the installation to a connection point shall, before making an application to the Authority for a feed-in approval..., submit a written request to the distribution licensee [e.g., Tenaga Nasional]... for such distribution licensee to carry out... a power system study (PSS) in respect of the proposed connection."

The SEDA website has clearly stated that such a PSS conducted for a company applying to supply 1MW to 10MW FiA will take 30 days costing RM40,000.

The question to ask is whether such a PSS was ever conducted by any of the above 12 successful companies, especially since 8 of them were set up only 21 days before the application deadline of 2 December 2011. How is it even possible that these companies were not eliminated immediately upon application when it cannot be possible that they have fulfilled their PSS as required by law?

Did SEDA break the law to award these companies the FiA? Was Suzi Suliana given preferential treatment as a result of being the daughter of Tan Sri Mohd Sidek Hassan who was the then Chief Secretary to the Government, and now newly appointed Chairman of Petronas Bhd?

3. Failure to ensure no monopolisation of FiA

SEDA had insisted that the deals were made in a "fair and transparent" manner as the company owned by Suzi and her husband was not the only one that had won more than one of the feed-in tariff (FiT) solar-power contracts.

The above represents a clear admission by SEDA in failing to protect "the need for fair competition and transparency in the implementation of the feed-in tariff system" as specified in the Renewable Energy Act.

The fact that other companies got away with multiple licenses does not in any way absolve SEDA of its award of 32.4% of the solar energy quota to 12 companies owned by Suzi Suliana and her business partners.

SEDA has obviously failed to avoid the “monopolisation of the Renewable Energy (RE) quota” as required by the Ministry of Energy, Green Technology and Water. The reason why a cap of 5MW was set for each company was to ensure as many companies as possible have the opportunity to participate in the above programme.

However, by allowing Suzi Suliana and her business partners to circumvent the rules by setting up more than a dozen shelf-companies to secure the FiA, SEDA has either proven itself negligent and incompetent, or worse acted in collusion with the applicants to monopolise the quota. This is despite its promise that "no preferential treatment will be given to any FiT application. All FiT applications will be treated fairly and equally through a transparent application process".

Conclusion

The award has caused a lot of disquiet and unhappiness in the renewable energy industry with many player claiming foul play and favouritism the in award of the quota. Many who are keen on the FiA were not able to secure any license.

Based on the above clarifications by SEDA, it is now imperative that the award for the FiAH must be rescinded, and the solar energy quota redistributed to companies who truly qualified based on the financial commitment and technical criteria laid down both by the Renewable Energy Act 2011 as well as the existing SEDA guidelines.

We call upon Datuk Peter Chin to reprimand Tan Sri Fong Chan Onn, who is the Chairman of SEDA and his board of directors for failing to adhere to the high standards set out in the Act as well as comply with the Authority's very own guidelines.

13 Nov 2013

I wish to clarify that:

In making and/or publishing the above, my statements therein were directed towards the implementation of Feed-in Tariff system implemented and administered by the Sustainable Energy Development Authority ("SEDA");

My intention in making those statements was to question SEDA on issues relating to the Feed-in Tariff application and approval process.

While I had in my statements directed questions and comments against Suzi Suliana binti Mohd Sidek and her husband Todd Michael Morath (“Sun Energy Shareholders”) which may suggest that companies associated with them had obtained Feed-in Tariff approvals from SEDA by virtue of their relationship with Suzi Suliana binti Mohd Sidek’s father, Tan Sri Mohd Sidek bin Hassan (“Tan Sri Sidek”) and/or some form of undue or preference treatment, I now confirm as follows:

Contrary to what may have been suggested, I do not know of any evidence that suggests any foul play involving and/or any undue or preferential treatment to, and/or favouritism to the Sun Energy Shareholders and/or companies associated with the Sun Energy Shareholders by SEDA in the award of any Feed-in Tariff approvals whether by virtue of their relationship with Tan Sri Mohd Sidek bin Hassan or otherwise.

I also accept that I was mistaken and wrong in reporting that the Sun Energy Shareholders and business partners were awarded 32.4% of Feed-in Approvals of the total quota allocated to companies producing between 1MW to 5MW. In particular I recognize that:

the persons mentioned by me as business partners of the Sun Energy Shareholders, namely Lim Boon Huay and Yap Kian Mun were merely incorporators of shelf companies and do not have any association or businesses with the Sun Energy Shareholders;

the Sun Energy Shareholders have no connection whatsoever with Semangat Sarjana Sdn Bhd, Kenari Pasifik Sdn Bhd Tiara Insight Sdn Bhd, Ambang Fiesta Sdn Bhd, Gaya Dunia Sdn Bhd and Rentak Raya Sdn Bhd; and

I did not state that the Sun Energy Shareholders’ ultimate and only business partner in respect of the Feed-in Approvals obtained was SunEdison, a global player in solar energy, which has significant experience and track record in solar power generation.

I did not contact the Sun Energy Shareholders, Tan Sri Mohd Sidek bin Hassan or Lim Boon Huay and Yap Kian Mun to verify or confirm my statements prior to or after making them.

I wish to repeat and re-emphasise that my statements were at all material times directed against SEDA on issues relating to the Feed-in Tariff application and approval process which I believe were made in the public interest in my capacity as a Member of Parliament, and clarify that I did not mean to disparage the character of or allege any wrong-doing by Suzi Suliana binti Mohd Sidek, Todd Michael Morath and/or Tan Sri Mohd Sidek bin Hassan.

For avoidance of doubt, I retract all insinuations of undue or preferential treatment, foul play and/or favouritism against Suzi Suliana binti Mohd Sidek, Todd Michael Morath and/or Tan Sri Mohd Sidek bin Hassan that may have been suggested in my statements.

In recognition of the above, I shall:

qualify all my statements as published on the internet with reference to my clarifications herein which shall be appended as a note to the same; and

remove all comments made by visitors to my blog that concern Suzi Suliana binti Mohd Sidek, Todd Michael Morath and/or Tan Sri Mohd Sidek bin Hassan in relation to my statements.

* Tony Pua Kiam Wee, DAP National Publicity Secretary & MP for Petaling Jaya Utara
Nurul Izzah Anwar, MP for Lembah Pantai