Choice of Energy Commission chairman puts him in serious conflict-of-interest situation

It’s good that Anwar says he plans to look into this. But how could such an appointment be made in the first place? Aliran has released this statement:

Aliran is alarmed by the recent appointment of a senior executive from Gamuda Bhd as the chairman of the Energy Commission, the country’s national energy regulator.

Gamuda group deputy managing director Rashdan Yusof was appointed as the head of the commission with effect from 15 February.

The role of the Energy Commission is to regulate the energy sector in three areas: economic regulation, technical regulation and safety regulation.

According to the Energy Commission’s website, the commission is supposed to provide economic regulation to “promote competition; enable fair and efficient market conduct and prevent the misuse of monopoly or market power”.

In terms of technical regulation, the commission is supposed to “ensure security, reliability, efficiency and quality of supply and services” in the supply of energy.

It is also supposed to provide safety regulation “to protect the industry, consumers and public from dangers” arising from the energy sector.

Given these roles, it is important that the Energy Commission is led by an independent person – someone not involved with any of the energy players.

The appointment of Rashdan, however, is an obvious case of conflict of interest, given that he is listed on the Gamuda website as deputy group managing director and alternate director to the Gamuda group managing director.

Gamuda is a major player in the renewable energy (RE) sector, spending huge sums on its renewable energy business.

The company has a 30% stake in ERS Energy, which is “a major full-fledged solar turnkey service provider in Asean …. with more than 695MW solar capacity installed. It is currently building utility-scale projects totalling 557MW, bringing the aggregate capacity to 1.2GW.”

Gamuda is also involved (via a 60% stake in SRS Consortium) in a major land reclamation project in Penang to create three artificial islands, also known as Penang South Islands (PSI). These artificial islands, which aim to house about 400,000 people, will require an enormous amount of electricity.

Gamuda’s subscriptions for RM200m worth of new shares in ERS Energy “will see Gamuda surface as the single largest corporate shareholder of ERS Energy”.

The latter firm “will play an integral role in delivering Gamuda’s RE aspirations for its Penang South Islands (PSI) project.

“Gamuda has committed to delivering 100% RE supply to the proposed 283-hectare Green Tech Park located within Island A of the PSI…”

ERS Energy is also developing a 39MW solar power plant.

Given all this, Rashdan’s appointment is hardly an example of good governance.

How can companies in the renewable energy sector, for instance, be assured of a level playing field when the Energy Commission chairman is a senior executive of a company that aims to venture into this sector in a big way?

This could hurt investor confidence, especially those interested in investing in the renewable energy sector.

To use a football analogy, it would be akin to appointing the assistant coach of the Argentine or France football team as referee of the World Cup final!

Even if the relevant federal legislation clearly provides for how to handle situations of conflict of interest, why appoint someone whose very background puts him in a position of conflict of interest?

This reflects poor judgement on the part of the government and raises many questions about how the Energy Commission chairman was selected.

Prime Minister Anwar Ibrahim’s announcement that he would look into Rashdan’s appointment is thus welcome news.

Aliran calls on the government to revoke the appointment and select someone independent to regulate this crucial sector.

Aliran executive committee
15 April 2023