The Energy Commission of Malaysia ("EC") had, on 12 March 2021, announced a shortlist of winning bidders for its fourth competitive bidding programme on the development of large scale solar power plants in Peninsular Malaysia (dubbed the LSS@MEnTARI and generally referred to by the industry as "LSS4"). The LSS4, launched in May 2020 in the midst of the COVID-19 pandemic, has the stated aim of stimulating the recovery of the economy and is largely seen as an opportunity for those who were unsuccessful in the previous bidding programme ("LSS3") to repurpose their submission packages. This is also perceived as a move to placate local players' claims that the outcome of the LSS3 programme did not result in enough jobs for local contractors, and that the LSS3 programme was not favourable to local players.
The LSS4 has not been without its own set of issues. For instance, there has been confusion about whether foreign participation would be allowed as EC had issued conflicting views on this. Eyebrows were also raised when the LSS4 results were not released by the end of 2020, as expected, in order to allow shortlisted bidders sufficient time to achieve EC-prescribed project milestones.
The LSS4 results, issued by EC on 12 March 2021, shortlisted 30 out of 137 bids received and awarded projects of an aggregate of 823.06MWa.c. (out of the 1,000MWa.c. offered during the bid submission stage). Closer inspection of the results highlight that there are several listed companies that are new entrants to the solar power generation industry. Some of these are primarily involved in "brown" industries, and their involvement would indicate a shift to adopt a more environmental, social and governance (ESG)-conscious approach in their business or activities.
We note that there has also been a shortfall in the aggregate capacity won by the shortlisted bidders, as only an aggregate capacity of 823.06MWa.c. was taken out of the initial plan to develop 1,000MWa.c. of LSS plants. The shortfall could have seen an additional three to six projects being awarded. The P2 Package (30MWa.c. - 50MWa.c) offered under LSS4 had generally attracted more competitive bid prices compared to the P1 Package (10MWa.c. - 29.999MWa.c.). Further, the targeted amount of 500MWa.c. under the P2 Package was met with all awards made to projects of 50MWa.c., being the maximum capacity on offer.
Overall, EC appears to have met its aim of parcelling out LSS4 awards on a more "equitable" basis to local players, with the consequent result being more jobs for local contractors. However, it may have come at a price as EC's actions in prohibiting foreign participation has been widely viewed as a protectionist move which may not augur well for the economy. For future programmes, it would be encouraging to select the winners from a pool of both local and international bidders competing on a level playing field.
