Back in 2012, 1MDB bought several IPPs for the price of RM18 billion. Where did they get this pile of cash to finance their purchase? Through acquiring debts. RM18,000,000,000 of debts.
As the result, 1MDB owns these IPPs and renamed them Edra Global Energy Bhd.
Debts will incur interests. And it has been piling up. The debt-laden 1MDB which has the Prime Minister as its ultimate boss, gave huge cash to the previous owners of those local and foreign IPPs and now they are sitting on a pile of debt with no means to repay them.
Fast forward to 2015, since 1MDB is on the verge of bankruptcy and had to be bailed out several times through debt repayment extensions, standby credit and a foreign company in return for some undisclosed assets, 1MDB is selling this group of IPPs to reduce their debts.
And so Tenaga Nasional Berhad (TNB) being owned by Khazanah Nasional Berhad whose ultimate boss is also the Prime Minister, is now poised to buy Edra Global for at least RM15 billion (according to reports), although the greedy 1MDB is asking between RM18 to RM20 billion. TNB may have to issue bonds for this purchase.
1MDB belongs to the MOF which ultimately belongs to the people. TNB is also ultimately owned by the people.
If TNB wins the tender to buy Edra, this nice story of how the Prime Minister got Malaysians to buy the same asset twice will come to an end, rather awkwardly.
First 1MDB bought Edra for RM18 billion via debt. Then TNB have to fork out another RM15 billion (most probably via debt too) to buy it again. That RM15 billion cash given to 1MDB will then be used to pay debts to the banks. In total, RM33 billion worth of opportunity cost is used to buy the same asset. This is the equivalent to 6 years of BR1M pay out, or several construction of KLIAs or decades of compensation for toll highways, and millions of low cost houses.
Isn’t this an act of sabotage on Malaysia’s wealth?
This is the fate of Malaysians. 1MDB lost the original RM18 billion investment and had to be in debt because of that, while taxpayers will again rescue it for RM15 billion. Buat hutang dua kali.
That is the fate of Malaysians under this Prime Minister.
The only people that are happy are the previous owners of IPPs who received a cool RM18 billion of cash, and the banks for getting back at least RM15 billion of that amount while Malaysians are saddled with debt interests every year.
And none of the 1MDB bosses got fired. No Minister of Finance resigned too. In fact, 1MDB’s director fees and remuneration increased from RM5.1 million in 2012, to RM5.9 million in 2013 to RM27 million (a whopping RM22 million was paid to a single director for terminating his contract in one of the IPPs) in 2014.
Taxpayers lost a lot of money, yet 1MDB top bosses get millions out of it.
This what happens when people with no experience in IPP were in charge of 1MDB. If there was no 1MDB and it was the expert (TNB) which had bought all those IPPs back then, we Malaysians today do not have to incur that RM18 billion debts plus interests since 2012.
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