So, Tenaga Nasional Bhd (TNB) lost the bid.
I'm actually not surprised.
I first felt that TNB was going to lose when my friend Wan Dal Cha who is quite knowledgable about the energy sector sent me a short but enlightening note which I highlighted in this post :
TNB staring at unequal competition
Of course TNB can't compete with the Chinese energy giant in the bidding.
It was a David versus Goliath fight.
In case of the real David, he was trying to beat the giant Goliath with a sling shot and he was successful when the stone hit the intended target.
No such luck though for TNB.
I think it was no match from the start.
The outcome must had been decided even before the bidding begins.
The Chinese giant simply have more money than TNB to make the winning bet.
I have to admit that I was cheering in vain for TNB.
When a friend asked me to highlight a Bernama story which supports the sale of Edra's equities to a foreign company, I knew that TNB was to lose the bid for certain.
Still, I republished the Bernama story in this post:
About being fair on the Edra Energy issue
It basically tries to assure the public that it's alright to open our energy sector to foreign companies.
The foreign companies cannot switch our light off as they please, it seems to suggest.
Here are excerpts of the Bernama report with the assurances in bold:
A researcher told Bernama, "The energy business is never as free as the operators may want it to be due to strong control mechanism, licensing and multiple regulatory bodies, including the Ministry of Energy, Green Technology and Water and Energy Commission."
For instance, he said, tariffs for the existing Independent Power Producers (IPPs) are fixed under the long-term Power Purchase Agreement (PPA) for the life of the PPA, and any revision to these tariffs will require the consent of EC and Tenaga Nasional Bhd (TNB).
He pointed out that there is also the primary fuel supply for the power plants which must be sourced from government-linked or controlled entities.
Currently, TNB controls coal supply and Petronas supplies gas.
"Gone are the years when a particular IPP could dictate 'take or pay' on TNB. Today TNB, which has total control of the National Grid, calls the shots. TNB will buy what it needs and not whatever IPPs produce," he said.
He stressed that TNB has full control over IPPs, foreign or local, because under the PPA, TNB could step in to take over the operations of a plant in the event of contract breaches.
Asked if foreign companies could use lower cost structure (from economies of scale) to undermine local operators, he said they must first have a huge market share in terms of capacity and fuel usage.
In the case of Edra Global Energy Bhd, which is now up for sale, its effective share of installed generating capacity in Peninsular Malaysia is only 14.6 per cent, significantly behind market giants TNB (50 per cent) and Malakoff Corporation Bhd (25 per cent).
For fuel share in Peninsular Malaysia, Edra utilises around 17 per cent for total gas-fired capacity and approximately 15 per cent effective share of total coal-fired capacity. And it has no hydro plants.
"With such a marginal share, Edra poses little threat on all fronts, especially in view of TNB's dominant and unique market position across all three segments of fuel supply, generation and transmission, its robust financial strength (total assets of more than RM110 billion) and familiarity with the local IPP industry," he said.
He also allayed fears that Malaysians would lose their jobs, saying there is no evidence to suggest that foreign companies would bring in foreign workers to replace Malaysians.
The Malaysia Investment Report by the Malaysian Investment Development Authority (MIDA) states Malaysia had approved investments of up to RM235.9 billion in 2014 which could potentially create about 178,360 job opportunities.
Foreign investments formed 27.4 per cent of the total investments (RM64.6 billion).
It is notable that many countries, including Singapore, Australia, Indonesia and the United Kingdom (UK), permit 100 per cent foreign ownership of power generation plants.
Hong Leong Investment Bank Research's energy analyst Daniel Wong was reported to conclude that even if the assets were sold to foreign companies, TNB would still remain a defensive stock and its role in the transmission of the nation's electricity would not be jeopardised.
Honestly, I suspect that the anonymous analyst quoted extensively in the Bernama report was actually from 1MDB.
It's to justify the impending sale.
But I think the excuses given seem to be quite good.
But all that doesn't matter now as the sale of Edra's equities had for all intents and purposes been concluded.
Let's just wait and see where TNB is going to be just two years from now.
If it suffers because of all these, then just wait for the next general election to do the right thing.
If by that time TNB collapsed, I suggest you all go and vote for Lim Kit Siang and gang.