SEDA should ensure effective implementation of current Feed-In-Tariff policy before asking for the electricity tariff for the Renewable Energy Fund to be increased from 1% to 2%

Joint Media Statement, Dr. Ong Kian Ming and Tony Pua, in Kuala Lumpur on the 19th of September, 2013

It was reported last month, August 2013, that the Sustainable Energy Development Authority (SEDA) is seeking another 1% increase in the electricity tariff from the current 1% for all consumers who use more than 300kWh per month.[1] This increase, according to SEDA, is to facilitate the release of more Renewable Energy quotas for the Feed-in-Tariff (FiT) which allows quota holders who have renewable energy installations to sell back electricity into the grid.

Before seeking to impose new financial burdens on the consumer, SEDA needs to demonstrate that it is capable of successfully rolling out its current plans. The current performance of SEDA has been far from satisfactory as evidenced by the following examples:

(i)                Many of the holders of the FiT have not seen their licenses revoked but have been given extensions by the Minister of Energy, Green Technology and Water

In a parliamentary reply to Tony Pua on the 27th of June 2013, it was stated that up to that point, only two companies – Bumi Masyhur (5MW) and Diversified Harvest Sdn Bhd (5MW) – have seen their FiT permits revoked because of non-compliance (‘tidak memenuhi syarat’).[2] It should be noted that one of these companies – Diversified Harvest – is one of the companies controlled by the daughter of former Chief Secretary to the Government, Tan Sri Sidek Hassan, who received more than 30% of the initial solar power quotas, as highlighted by Tony Pua in July 2012.[3]

In the same parliamentary reply, however, it was stated that there were 4 permits that were supposed to have been revoked but were given 5 months extensions by the Minister. These permits are owned by Cemara Angsana (holds two permits of 1.25MW and 4.5MW respectively), Corporate Season (4MW) and Gubahan Ceria (4.5MW). To quote the parliamentary reply “Pembatalan sepatutnya dibuat pada … tetapi diarik balik berdasarkan keputusan YBM (Yang Berhormat Menteri)”. It should be noted that Corporate Season is one of the companies controlled by the daughter of the former Chief Secretary.

In addition, when the original FiT commencement dates (from December 2011) were compared to the latest FiT commencement dates as listed on SEDA’s website[4], it was found that 28 other permit holders were given extensions as well.

This clearly shows that many companies were having problems meeting their deadlines which calls into question SEDA’s implementation plan for renewable energy, in this case, the solar energy quota.

(ii)              It is questionable whether some of the permit holders actually managed to successfully install its quota

For example, IRM Solar Sdn Bhd is shown to have installed 5MW of solar power in April 2013 in Perlis, according to SEDA’s website. But the IRM Group, the mother company, which is also listed on Bursa Malaysia, had one its subsidiaries default on its debt[5], failed to submit its accounts in February 2013[6] and lapsed into PN 17 status in June[7]. It is hard to imagine the successful installation of a multi-million ringgit solar power plant in the midst of all these financial difficulties.

Another company, Ambang Fiesta, was supposed to have successfully installed two solar plants with a 1.3MW and 5W capacity in June and November 2012. But SEDA’s own website only shows that a 1MW plant has been successfully installed by Ambang Fiesta in Perlis.[8] It should be noted that Ambang Fiesta is one of the companies highlighted by Tony Pua as belonging to a group of companies that were allocated the lion’s share of the solar power quota in 2011.

(iii)             SEDA has not delivered on its own targets

According to SEDA’s website, 31.53MW of solar power was successfully installed by FiT permit holders in 2012.[9] But if the deadlines for each of the quotas are added up, a total capacity of 70.3MW was supposed to have been installed by the end of 2012.[10] For January to August 2013, a total capacity of 41.1MW was supposed to have been installed. Yet, according to SEDA’s own website, as of today, 19th September, 2013 only 11.82MW has been installed so far.[11]

This means that for this year, SEDA has not managed to even fulfil 50% of the quota target for solar power! At the end of Dec 2011, SEDA had already accumulated RM300m in the Renewable Energy Fund and this fund is expected to grow by at least RM300m a year, with the current 1% tariff in place. A recent report quoted SEDA CEO, Datin Badriyah Abdul Malek as saying that SEDA has RM665 million in its accounts. Since SEDA has only disbursed RM44m thus far (for 2012 and the 1st half of 2013), and with questions surrounding the full roll out of the existing quota, SEDA has not yet made a serious case for additional funds.

Given these serious shortfalls in SEDA’s performance, we call for the following:

(i)                That SEDA disclose the full list of beneficiaries of the RM44m disbursed thus far under the FiT agreements for companies as well as individuals[12]

(ii)              That SEDA disclose the full list of companies who have failed to meet their commencement date deadline thus far and how many of them have been given deadline extensions and for how long

(iii)             That the Ministry of Energy, Green Technology and Water only considers the further 1% hike in the electricity tariff to fund further FiT quotas until SEDA gets it act together.

Dr. Ong Kian Ming, MP for Serdang

Tony Pua, MP for PJ Utara and DAP National Publicity Secretary

[2] (An Appendix to the same question showed that a third company, Abric Properties, holding a small quota of 0.0069MW, had also seen its permit revoked)