Thursday, August 19, 2010

Why buy back the Sarawak Energy Berhad’s shares?

by Sebanaku Sarawak

KUCHING: During the recent sitting of State Legislative Assembly (DUN), the Padungan assemblyman Dominique Ng was being deprived of his right to demand for an answer on the Barisan Nasional Government’s move to buy back all the privately owned shares of Sarawak Energy which had took over SESCO without any payment of cash.

It was done after SESCO was privatized in June 2004 by the State Legislative Assembly (DUN).

Was the buy back done in the interest of the rakyat? Or it was carried out in the interest of a handful of well-connected shareholders or directors?

Directors were making tones of monies after carrying out projects which were said being implemented for the sake of the rakyat.

But despite of all of these projects, the rakyat still have to pay high electricity rates!!!

Was the decision to create a monopoly of the supply of the electricity made in the interest of the rakyat or just to create a cash cow for these well-connected directors?

The following is an extraction of a text speech of YB Dominique Ng which he didn't have the opportunity to read in the recent sitting due to being suspended by the DUN Speaker Dato Sri Mohd Asfia Awang Nassar :

In the 5 short years after this BN-controlled House approved the privatization of SESCO in 2004, the same BN Government has offered to buy and has bought back all the privately owned shares of Sarawak Energy.

Notice was given on the web, and in national dailies on Nov. 30th and Dec.1st 2009.

Thus from public owned to listed private owned in 2004, then back to government owned in 2009.

A major state asset is tossed around and tossed again twice without prior public hearing or consultation, the Rakyat kept in total darkness.

This is a prime example of this BN government’s arrogance in denying the public of any say in governance and major public policy, in a manner clearly undemocratic and non-transparent.

This has become a pattern of the autocratic behaviour of this BN government.

SELL AT WHIM, BUY BACK ON FANCY, GRAB ON GREED, KEEP RAKYAT DUMB, whether it is Sesco, NCR land or Kuching Government land !

Through the Government of Sarawak as trustee, all Sarawak people have an inalienable stake in SESCO, whether or not as paying consumers of electricity supplied by SESCO.

Thus I stand here today, representing the Rakyat, demanding a full explanation from the BN Government of the flip-flop, privatization-deprivatisation logic, from the perspectives of
1. Public interest, possible upward or downward revision in rates;
2. Organisational structure and processes; restructuring and staff redundancy;
3. Efficiency of service delivery, especially stability and reliability of supply under load stress;
4. Staff renumeration and collective agreements;
5. Planning, especially rural electrification,
6. Strategic planning including renewable energy and carbon emission reduction.
7. Finance and accounting (assets, liability, cash-flow, etc.), forward forecasts.

I call on the government to make available to the public, and concerned and interested parties all the annual financial reports of SESCO/SARAWAK ENERGY from 2004-2009, as background material for public discussion.

Our position on SESCO and energy supply may be recorded here by my own statements outside this House while the SESCO privatization bill was presented and passed here in June 2004.

May I commend the Honourable Chiew Chew Sing of Kidurong, now my erstwhile Pakatan Rakyat ally, as the only YB who voted against the privatization bill.

The related speech of YB Chiew in this House per Hansard June 2004 should also be referred to in connection with what I have to say here.

In June 2004, SESCO, the electricity company of Sarawak with a history of over 50 years was privatized by the approval of this House, with provisions in the said bill circumventing usual ownership transfer procedures.

Subsequently, following provisions in the bill, Sarawak Energy took over SESCO without any payment of cash.

I am on record to have voiced my strongest opposition to the bill, and by letter to all members of the DUN, I appealed to them to reject the privatization bill to save SESCO and uphold the rights of Sarawak and its people.

I dealt with the matter from the angles of SESCO net asset worth, transparency and public accountability, social responsibility, service delivery and efficiency, rates chargeable, share distribution among others.

Disappointingly only 1 member, that is YB Chiew of Kidurong, voted against the bill in its final reading.

The passage of the bill in effect removes the 1962 SESCO Bill and deprives the people of Sarawak their rights as regards to a major state owned agency.

The 2004 privatization bill removes the restrictions placed on the use of SESCO funds, including use for investment, under Article 21 and 22 of the 1962 Bill.

On this account, I opposed the privatization as it exposed the company to real risk of misuse of company assets by the private owners.

Privatisation also removed accountability to Sarawak Government, this House and the people of Sarawak.
No annual reports and financial reports need to be submitted to this House.

The guarantee of reasonable tariffs for consumers provided for under the 1962 Bill was also rendered void.

The privatization has shifted the principle of installation of supply from need to profitability, thus absolving it from social responsibility.

The stability of supply was jeopardized as I had predicted when I opposed the 2004 Bill.

This in 2008 a massive blackout affected virtually the whole of Sarawak.

In recent years sporadic and recurrent blackouts are common in several areas of Kuching and outstations.

While consumers suffer from all the ills of profit-first corporate motive of Sarawak Energy, the profits which accrue to the company rose considerably.

Thus in 2005, the pre-tax profit was RM 195 million, as compared to RM 75 million in 2004.

The government should detail to the House the assets of Sarawak Energy when the government buys back all the shares, the nett asset value per share , the prospective price earning ratio, etc.

The Government handed SESCO to Sarawak Energy, without the latter having to pay, but the Government has to pay high on comprehensive buy back offer.

I call for full accounting by the government, to prove that the privatization and deprivatisation has not been at an enormous loss to Government and people.

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