Wednesday 25 July 2012

Seda admits to screw-up in solar power applications

Updated 6:20pm 

The Sustainable Energy Development Authority (Seda) has admitted there is a weakness in the Feed-in Tariff (FiT) online application process, leading to former chief secretary Mohd Sidek Hassan’s daughter Suzi Suliana obtaining a large chunk of the solar energy quota.

NONEWorse, Seda chairperson Fong Chan Onn said the body has no legal basis to disqualify any of the 12 companies linked to Suzi's and her associates, even though the online application system was intended to ensure a fair distribution of the renewable energy quota to all players.

“When we first started this system, we were worried about this issue (of monopoly). We want a big number of players in the system... So we set a limit of 5MW per application... and the queuing process (in the application system)... (so) we could distribute it among a big number of players,” said Fong.

“At the end of the day, the result is what it is... We are not happy (with the result of the application). Frankly speaking, we are not happy. We want to distribute fairly but we are advised (that) once the rules are there, we have to follow them.

“We can (refine the rules), but even those steps would not ensure, would not 100 percent ensure that there is no monopoly or 100 percent ensure that a company would not occupy more than 30MW, because how many layers (of company structure) we can check? But we have tried.”

Fong said this during a public briefing on the FiT system this morning at the Seda office in Putrajaya.

He was responding to an expose by opposition MPs Tony Pua and Nurul Izzah Anwar that the 12 companies have obtained 32.4 percent or 45.9 MW of the quota set for solar energy under the FiT scheme.

This was achieved through a complex layer of holding companies and joint venture partnerships.

Both Pua and Nurul were present at the briefing and they grilled Fong, together with Seda chief executive officer Badriyah Abd Malek, chief operating officer Ali Askar Sher Mohamad and legal advisor Toh Beng Suan, with tough questions.

Energy from renewable energy

FiT was introduced to spearhead the development of energy generation from renewable energy, such as biogas, biomass, small hydro plants and solar photovoltaics.
It is funded by the people, through a one percent increase in electricity tariffs of consumers since last year for those using more than 300kWh.

Under the programme, private companies can apply to be renewable energy producers, and they can then sell renewable energy to power distributors such as Tenaga Nasional Bhd.

The online application system, which Seda claimed is completely free of human intervention to prevent bias and preferential treatment, works on a first-come first-served basis.

Although each applicant can only apply for a maximum of 5MW in solar power production to ensure fair distribution, Suzi managed to circumvent the system by applying through different companies.

Fong said Seda would plug the loophole when a new quota is opened for applications in the future, but warned that no system could be rig-proof.

“If people create companies of six layers, what can we do? We have tried our best within the system,” Fong added.

His view was echoed by Badriyah, who said she would not be able to perform her other duties if she were to try and trace the ultimate owner behind those companies.

One of the 50-odd people at the briefing jokingly told the floor that half of those in the hall, comprising mostly industry players, would after the briefing be finding ways to rig the system.
'It will take two hours to trace the owners'

Pua argued that even if the owner had created a company structure with 10 layers, it would not take more than two hours to trace the owner through a search with the Companies Commission of Malaysia.

He suggested that Seda should require all applicants to declare, in their applications, the ultimate shareholders of their companies.
This was because the current system only required applicants to state the shareholders of the company that submitted the application.

Fong also clarified that the issue of Suzi monopolising the quota does not arise because it is an ongoing process and a new quota will be opened up every year for application.

NONEBadriyah (right in photo, with Toh) said securing the quota did not guarantee approval to be a renewable energy producer.
This was because successful applicants would have to meet certain milestones, such as installation of the equipment, securing financial support and also getting the relevant licences from the other authorities.

Pua asked - since Suzi's majority share of the quota has gone against the spirit of the Renewable Energy Act 2011 that upholds fair distribution - whether the law allowed Seda to overwrite this flaw in the application system.

The answer was in the negative.

“To be honest with you, you talk about the majority of certain personalities and companies owning the big quota. It is not that we do not know.
“The next day (after applications were opened) we knew it already, but we checked with our lawyers and the lawyers said, 'No you can’t, they will sue you',” replied Badriyah.

Toh, the Seda legal adviser, concurred, adding that Seda has completely no legal basis to reject successful applications.

Pua tried to point out that in most of the contracts between the government and private sector, the government has the final say.

However, the Seda management said this did not exist in the FiT approval grounds.

“I’m going to be very happy (if you can find the legal rectification)... I’m with you,” chipped in Fong.

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