Scrap NCA if no answers coming
Published on: Sunday, December 05, 2021
By: Datuk John Lo
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Carbon trading has been established in the Kyoto Protocol and improved in the Paris Agreement. Pollution control has come a long way in that our earth needs protection from carbon emission has been recognised globally. Countries are now required to set target dates for compliance to achieve carbon neutral. The two biggest polluter-countries are USA and China.
China is addressing her pollution problems aggressively by extensive reforesting and regreening, by converting to Electric Vehicles and reducing use of coal for power generation.
Two types of carbon trading, mandatory and voluntary. Only a few countries have set up carbon trading systems. Singapore and HK are the latest.
In summary, standards are being developed, regulatory and legal framework are incomplete.
Reliable professionals and code of conducts are rare or non-existent. Only some financial institutions are looking into this new form of business. More uncertainties than certainties. Most important for Sabah to be wise about is to safeguard our interest in view of the immature status of the carbon trading market system. Sabah may be taken for a 100-year long ride.
Cautions in the Nature Conservation Agreement – PRUDENCE, PRUDENCE, PRUDENCE.
My appeal to the Sabah Government is very simple, exercise greatest caution and ensure any carbon trading agreement will benefit Sabah’s present and future generations.
Prudence dictates that we undertake some or all the following protocols:
Protocol 1. Can Sabah establish a carbon trading team?
I would say yes without hesitation for these valid reasons.
[a] Sabah Foundation has entered into carbon offset agreements with some companies many years ago. SF was a pioneer way before the anti-pollution advocates. We can build up our carbon trading system instead of farming it out to 2 unknown companies [Tierra Australia, Hoch Standard of Singapore] to manage our green asset.
[b] I am certain Datuk Sam Manan, Sabah’s former Chief Conservator of Forest, an internationally renowned personality in conservation can head a team to establish Sabah’s carbon trading venture.
Another Sabahan who is knowledgeable and can contribute in substantial manner is the present Chief Conservator of Forest, Datuk Fred Kugan. Who are behind these two companies and what are their professional CVs in conservation/carbon trading compared to Sam and Kugan?
I am certain there are many Sabahans who can contribute too. Sabah can quite easily set up a team and if need be, we can employ outside experts. We should have confidence/faith in our own people first before running to some unknown/unproven foreign companies.
[c] Who can command better standing in the international carbon trading market, Sabah’s official carbon trading team or Hoch Standard?
Protocol 2. Credentials of Tierra Australia and Hoch Standard.
It has been alleged that these two companies have residential addresses following company searches in Australia and Singapore and lack creditable and qualified personnel.
If these allegations in social media are wrong, these two companies should provide documented evidence accordingly. With greatest respect and my apologies in advance if I am proven wrong, my requests to these 2 companies are:
[a] I request these two companies provide proven credential to handle Sabah’s 2 million ha [4.9 million acres] of green assets. In perspective, all of Sabah’s oil palm plantations occupy only 1.7 million ha or 4.2 million acres.
[b] If Hoch Standard is already managing carbon trading for a few countries, I request them to produce evidence/ expertise/system/financial records, transactions.
[c] The NCA says Sabah will get RM3.2b [70pc]. Hoch Standard will get about RM1.2b [30pc]. I request Hoch Standard to give proof of their capacity/capabilities to generate and handle this huge amount of money? I request it to convince Sabahans to trust them with so much of our money. I request it to give justifications for this RM3.2 billion trust which is almost as large as Sabah’s annual budget. With this sort of money, Sabah can get first class experts.
[d] I request it to reveal who are really behind, in effective control.
[e] I request it to justify 30pc share of the revenue. Is this an established norm? Typical fees of investment bankers like UBS, HSBC is 1pc, for larger customers 0.5pc or even 0.25pc. I request it to produce evidence of its superior service/financial advice than the international investment bankers.
[f] I request Tierra Australia, as the broker in this NCA to give evidence that it is in the business of carbon trading brokering.
Protocol 3. Can Hoch Standard deliver? What are Sabah’s remedies?
No guarantee of 100pc success in any venture. In the event of default or negligence, can I request Hoch Standard to produce evidence of sufficient assets to pay Sabah? Hoch Standard has a paid-up capital of USD1,000 in the corporate search. Can I request them to produce evidence of creditable financial standing? And to provide financial statements since its incorporation?
Who in the Sabah Government will bear responsibility in the event of default or negligence?
Protocol 4. Why NCA kept a secret?
Can I request for confirmation that this NCA is a high security document, so much so that it is being kept a secret?
What happens when carbon emission is zero?
Most countries have established deadlines to achieve carbon neutral, including Asean, China, USA, UK and Europe. China may take the longest has until 2060. All major countries have set target dates earlier than China.
The NCA tenure is for 100 years which is much longer than all the global zero emission deadlines. In response to targets set in the Paris Agreement, all advance countries have already aggressively embarked in pollution control, regreening and are converting to green energy in hydrogen, wind power, solar. Outstandingly is the rapid development of safer mini nuclear reactors. All these developments are pointing to a fast demand reduction in Carbon Credits as countries/industries achieve zero emission in the next 20 years. What will Hoch Standard do for us after 20, at most 30 years? I request it to give their alternative plan that they will be able to continue to source RM3.2 billion for Sabah.
What are the prudent things to do with this NCA?
My greatest respect to Sabah’s AG, Datuk Nor Asiah for having issued a letter to a Dr Ho Choon Hou of Hoch Standard on 1 December 2021. This letter is available in social media. The contents are self-explanatory and does not speak well of how the NCA scheme has been formatted.
http://www.dailyexpress.com.my/news/182637/ag-orders-probe-into-leak/
In view of our AG’s letter, I am much saddened that this NCA has been allowed to reach a stage when the agreement has been executed. In my humble opinion, the whole thing could have been handled much better if due diligence and common sense had prevailed.
As a sabahan I plead to the sabah government leaders to seriously consider rescinding the nca if Hoch Standard is unable or not forthing coming with documentary evidence of their track record, capacities, capabilities, especially in expertise and creditable financial standing.
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