This article first appeared in The Edge Financial Daily, on November 25, 2015.

KUALA LUMPUR: Despite concerns that the 100% sale of 1Malaysia Development Bhd’s (1MDB) energy assets held by Edra Global Energy Bhd to China’s government-owned China General Nuclear Power Corp (CGN), the government is still confident of being able to control the company from turning into a threat to national security.

Energy, Green Technology and Water Minister Datuk Seri Maximus Ongkili told Dewan Rakyat yesterday that prior to allowing the 100% sale, instead of the usual 49% when it comes to national strategic assets, the ministry considered the issue and believes it can control Edra via laws and other political tools.

“[The deal] was between a willing buyer and willing seller. The ministry and the regulators have considered this issue when 1MDB wanted to let go of its Edra assets. Prior to 2008, the regulator was the Economic Planning Unit and now the regulator is the Energy Commission.

“We have agreed to allow more than 49% sale of equity [for a national strategic asset] because it is a transformation within the energy sector and the total electricity generated is only 14% of the nation’s need. The rest is under Malakoff [Bhd] and TNB (Tenaga Nasional Bhd).

“After considering, we know we can still control Edra through the law, the Environmental Protection Agency or the licences given to Edra companies,” explained Ongkili, citing Singapore as an example, as around 80% of the island’s energy comes from foreign-owned companies.

Ongkili was responding to questions directed to his ministry by PKR Bayan Baru member of parliament (MP) Sim Tze Tzin, Parti Amanah Negara Sepang MP Mohamed Hanipa Maidin, DAP Serdang MP Ong Kian Ming and PAS Pokok Sena MP Datuk Mahfuz Omar.

Mahfuz, then questioned Ongkili whether with this precedent, the government would be willing to sell more national strategic assets to foreign interests.

“We will consider such matters when the time comes. If there are benefits to it and it doesn’t jeopardise national security, we will consider it when the time comes,” answered Ongkili.

In a statement issued last night, CGN said it complies with all local regulations and guidelines.

“In Malaysia, this will mean supporting all government initiatives, for example, bumiputera entrepreneurial participation/development in the energy sector.

“CGN welcomes Malaysian investors in Edra at the opportune time and does not rule out a possible listing of Edra in the medium term,” said its chairman He Yu.

He also said CGN encourages the current local management and staff to continue running the Edra companies.

Earlier at a press conference at the Parliament lobby, Mahfuz questioned 1MDB’s decision to sell its 100% stake in all its energy assets to CGN, pointing out the error in putting one of the nation’s strategic sectors at the mercy of foreign powers.

Mahfuz said in total, 1MDB controls around 14% of the national energy output and any decisions regarding a strategic asset must “look at the bigger picture”.

“When it comes to national strategic sectors, you need to look at it from a broader perspective. You need a bigger picture. You can’t just pawn it off so you can settle 1MDB’s debts! So ... to settle 1MDB’s debts we sell off our strategic sector ... we sell off 14% of our national energy,” stormed Mahfuz.

He recalled the incident when Pantai Hospital Group was sold to Singapore’s Parkway Hospital and the government was forced to reacquire the group after realising that Pantai held the concessions for Fomema.

“When you don’t look at the bigger picture, incidents like when the government sold off Pantai Hospital Group to Parkway and they didn’t realise that Pantai held the concession for Fomema [took place]. In the end, they had to buy Pantai back at a loss.

“Do we want the same to happen with 1MDB power assets?” asked Mahfuz.

The energy assets sold to CGN for RM9.83 billion in cash are Edra Solar Sdn Bhd, Edra Energy Sdn Bhd, Powertek Energy Sdn Bhd, Jimah Teknik Sdn Bhd, Jimah O&M Sdn Bhd, Mastika Lagenda Sdn Bhd and Tiara Tanah Sdn Bhd.

In a separate statement, PKR secretary-general cum Pandan MP Rafizi Ramli said the sale of the assets is against Malaysia’s national strategic policy.

“This goes against the national policy that strategic assets such as electricity generation and supply must not fall into the hands of a foreign company and are subjected to foreign equity up to 49%,” said Rafizi.

He also pointed out five risks the nation will face once the power assets are firmly in the hands of CGN.

“The first risk is to the stability of our electricity supply. The second risk is the rise in tariff when these companies renegotiate their concessions in 2016 and 2022. The third is the threat to domestic workers, with more influx of foreign talent.

“The fourth is more IPP (independent power producer) contracts to be given to foreign companies in the future. The final risk is towards TNB itself, when these foreign giants start to weaken TNB’s strategic position,” said Rafizi.

Thus far, Rafizi has filed two motions in Parliament to stop this from occurring.