Investors may cheer at the Edra power plant sale. 1MDB has finally found a saviour. However, there is more than meet the eye in the deal.

        The proceeeds of the sale is not even 20 percent of 1MDB 45b debt pile(higher if the foreign debts are marked to market). 1MDB has been permanently deprived of its only useful assests, powerplants that generate consistent resideual income. It will be almost impossible for them to service its remaining 35b debt given that it is selling a 100 percent stake. It smacks of desperation and most nations will view the deal as a national security issue.It is almost unprecedented for a nation to sell a 30 perecent stake in its power plants to foreingers. Given the track record of the chinese, they wouldnt have signed the deal if they are not guranteed a certain amount of power pucrchase by TNB. The chinese are shrewd and not stupid. 1MDB now poses a higher systemic risk to the malaysian economy than ever before

        Edra controls more than 30% of total power generation and has rights to project 3b which are new power plants that have to be built before the nation faces an immienent power shortage. Those are under the control of the chinese now. They may eventually control almost half of the nations power generation when the new plants are comepleted. China Nuclear therefore will have huge leverage over the prices in the power that it sells to TNB and TNB may have to buy from them at above market rates. That will only result in higher power rates for the consumers as TNB will pass on the higher costs imposed by Chinese Nuclear. Edra has no money to build the new power plants and thats the long term goal of the Chinse. Higher power tariffs is the last thing malaysians can afford under the slowing economy and will only result in a recession