By G. Sharmila
1Malaysia Development Bhd (1MDB) has posted RM1.2 billion in losses over acquisition of power assets, according to the notes to the company accounts for the year ended March 31, 2013.
The impairment assessment for goodwill on acquisition resulted from 1MDB’s purchase of power assets for a total of RM10.9 billion. However it was not clear which of the acquisitions accounted for the impairment.
Effectively this could mean that 1MDB overpaid by RM1.2 billion for its total power assets, or over 10% of the total value in less than a year after the acquisitions.
The notes to the account said that despite the impairment loss recognised, the group has subsequently utilised its original investments to build further value in the form of the successful bid of project 3B. Project 3B refers to the 2,000MW coal-fired plant contract that it won and will build for RM11 billion.
1MDB owns three power plants in Malaysia through Powertek Energy Sdn Bhd and another plant through Kuala Langat Power Plant (KLPP).
According to the notes to the accounts, Powertek Investment Holdings (PIH), which is the holding company for 1MDB’s power assets, completed the acquisition of Powertek Energy Sdn Bhd (formerly called Tanjong Energy Holdings Sdn Bhd) from Tanjong Public Limited Company on 22 May 2012 for RM8.5 billion.
In October that year, 1MDB purchased the Genting group’s power-generation unit Sanyen Sdn Bhd for RM2.38 billion, later renaming it Kuala Langat Power Plant or KLPP. To purchase Sanyen, 1MDB took on a bridging loan of RM607 million which is payable on a semi-annual basis over 42 months.
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