Industry awaiting RFP for Track 4 plants

By Sharen Kaur

KUALA LUMPUR: The Energy Commission has yet to issue a request for proposal (RFP) notice to build new power plants under the so-called Track 4, fuelling speculation that it may pursue direct negotiations for the projects instead of competitive bidding.

 Two coal-fired power plants, coded Track 4A and 4B, are in the works following the recent award of Track 3B contract to 1Malaysia Development Bhd (1MDB) to build a 2,000-megawatt (MW) power plant for an estimated RM11 billion.

  Business Times understands that construction of Track 4A and 4B are expected to begin in June next year at a cost of between RM8 billion and RM10 billion and have combined capacity of about 2,000MW.

 An industry source said the notice should have been issued by now as the process from RFP to award and then start of construction might take more than a year to complete.

  The industry, he said, had earlier expected the RFP to be issued on Monday.

 "The perceived delay in issuing the RFP notice for Track 4 has raised concerns that the contracts may be awarded on a direct negotiation basis. It looks like the commission is going back to the old style of awarding contracts for power plants," a source said.

   Prior to 2012, power generation licences were issued through direct negotiations, a process that some critics said did not ensure selection of the most cost-efficient proposal.

  The commission subsequently decided to open up the bidding process.

 The first gas-fired power plant in Prai, Penang, coded Track 1, was awarded under competitive bidding to Tenaga Nasional Bhd (TNB), following its proposal to sell electricity at 34.7 sen per kWh, which was the lowest price.

  The commission has so far awarded contracts to build four power plants, namely Track 1, 2, 3A and 3B through the competitive bidding process.

  Track 3B's 2,000MW coal-fired power plant project attracted four bidders - YTL Power International Bhd, 1MDB, Malakoff Corp Bhd and TNB.

 1MDB won the bid because of its "most competitive" proposal,  ahead of closest rival YTL Power, which was said to have offered the lowest price.

 It was reported that YTL Power did not meet the commission's requirement for the Track 3B power plant to be based on proven ultra supercritical or supercritical technology.