CO885-(11-12) — Page 134

TABLIC PREORD OFFICE

Reference -

C.O.882/12

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC - COPYRIGHT PHOTOGRAPH-NOT TO|

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1. Malayan Collieries, Limited (hereinafter referred to as "the Coal Company ") is a Company incorporated in the Federated Malay States with an issued capital of $3,186,670 and has been carrying on (inter alia) the business of colliery owners since the year 1913. The Coal Company has for many years supplied coal in large quantities for use by the Federated Malay States Railways, and also to tin mines for the purpose of generating steam and electrical power. Large sums of money have been paid by the Coal Company to the Railways on account of freight. In order to keep this memorial as concise as possible, we attach as an Appendix some facts and figures which may be interesting to you.

2. One of the consumers supplied with coal by the Coal Company is Malayan Tin Dredging, Limited, which Company (hereinafter referred to as "the Mining Com- pany") has a power station in Perak which generates electric energy for the purpose of working the mine belonging to the Mining Company, and also the mine belonging to another Company-the Southern Malayan Tin Dredging, Limited (hereinafter referred to as "the sister Company "). The Mining Company's power station is erected on land held under Mining Lease, and the electric energy is generated by the use of coal ordinarily purchased from the Coal Company. The Mining Company is the holder of a licence issued under Section 4 of the Electricity Enactment of 1925; which licence authorizes the use of the power plant for producing electrical energy for the use of the Mining Company and the sister Company.

to as

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3. Perak River Hydro-Electric Power Company, Limited (hereinafter referred the Power Company ") is a Company incorporated in England which carries ou the business of generating and supplying electric energy in Perak. It is registered in the Federated Malay States under the British and Foreign Companies Enactment. It has an issued capital of £1,000,000, consisting of 500,000 Cumulative Preference Shares, and 500,000 Ordinary Shares, and prior to January, 1931, it had issued £1,250,000 Guaranteed Debenture Stock, and £1,350,000 Participating Debenture Stock. It had also obtained a loan of £850,000 from the Federated Malay States Government.

4. The Power Company was promoted in July, 1926, with the object, amongst others, of accepting and fulfilling the obligations specified in an agreement (hereinafter referred to as "the Concession Agreement") made on the 5th November, 1926, between the Sultan of Perak and the Power Company. The Concession Agreement, though expressed not to confer any monopoly (see Clause 6) in effect confers upon the Power Company rights which can be exercised in such manner as to create, for most practical purposes, a monopoly for the supply, except to private producers, and certain Sanitary Board areas, of electric energy, within the area in Perak defined in the Con- cession Agreement as

"

the Concession Area."

5. On the 14th November, 1926, the General Manager of the Coal Company addressed a letter to the then British Resident of Perak protesting against the granting of what might virtually prove to be a monopoly in favour of the Power Company, and that such action was against the public interest. On the 26th January, 1926, the Secretary to the Resident replied that the matter had been carefully considered, and that the public had, in the opinion of the Government, Deen fully sateguarded by Clause 14 of the Concession Agreement, though how that clause protects, or can protect, the public, is difficult to understand.

6. The Power Company from its inception has been operating at a loss, which loss has been increased by the introduction of tin restriction and early in the year 1931, it obtained the necessary authority from its shareholders and others, to create £400,000 "Prior Lien Debenture Stock,' of which not more than £200,000 were to be issued immediately, and any further issue was to be held in reserve in case of need, and to be subject to the consent of His Majesty's Treasury.

7. The Power Company is in a position to produce more electric energy than it can utilize or find consumers for. The Mining Company and the sister Company are large consumers of electric energy, and to the best of our knowledge th Power Com- pany has arranged to acquire the Mining Company's power plant for about £120,000, to close down such power plant, and to supply the Mining Company and the sister Company with electric energy produced from the Power Company's plant, at the price of about 1.7 cents per unit, which price is approximately the inclusive sum which it now costs the Mining Company to generate and supply electric energy obtained from its own plant, by the use of coal supplied by the Coal Company. We have had no means of obtaining confirmation of the foregoing figures, but we understand that they are substantially correct.

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8. The Concession Agreement confers upon the Power Company the following powers:

9.

"

To acquire "for the purposes of the undertaking as hereinafter defined (the undertaking is not, however, defined in the Concession Agreement) land held under registered title, &c., by agreement, or compulsorily under the Land Acquisition Enactment of 1922 (Clause. 7). (ii) To acquire with the approval of the Government such subsidiary power transmission lines, &c., within the Concession Area as shall be necessary to develop and operate the undertaking" (Clause 12). (iii) To acquire, by agreement, from undertakers "to whom a licence for the production and supply of electricity has been or may be granted relating to a district or place within the Concession Area," the undertaking authorized in such licence (Clause 22).

stations

The Coal Company are advised that the proposals of the Power Company referred to in paragraph 7 hereof do not come within the power authorized by Clauses 7, 12, and 22 of the Concession Agreement for the following reasons:-

(i) Clause 7 particularly refers to land, and interests in land, and not to under- takings. The Mining Company cannot, merely by agreement with the Power Company, convert its mining titles, which confer no surface rights (except in so far as they are necessary for the working of the mine) into ordinary grants or certificates of title conferring rights, and the Power Company would therefore be unable, except by compulsory acquisition under the Land Acquisition Enactment, to acquire the land on which the Mining Company's power station and transmission system have been erected. As the Power Company is proceeding with its plan by agreement with the Mining Company, it cannot very well be intending to act under Clause 7 of the Concession Agreement, and in any event the Coal Com- pany is advised Clause 7 is inapplicable.

(ii) Clause 12 only refers to acquisition

"

necessary to develop and operate the undertaking" of the Power Company. The proposed acquisition would naturally assist to develop the undertaking of the Power Company; but it is submitted that it is not necessary to acquire the Mining Company's plant in order to develop and operate the undertaking of the Power Company.

(iii) Clause 22, only applies to acquisition of the undertakings of undertakers of the character of local authorities, or of undertakers who are suppliers to a district or town or township, and not to undertakers who are primarily private producers. The clause in terms refers to licences relating to a district or place," but if the clause be read as a whole, it is submitted that the word " place was not intended to apply to a place consisting

only of the locality of one or two mines, and that the clause was not intended to apply to the acquisition of the undertaking of a private producer.

10. The price of 1.7 cents per unit of electric energy proposed to be charged to the Mining Company and the sister Company, is much less than the price charged by the Power Company to other consumers, and by the terms of Clause 26 of the Concession Agreement the Power Company is precluded from showing discrimination or granting preferential treatment "to consumers similarly situated, and taking supplies of electrical energy similar in quantity load and power factor, &c.," except in cases to which Clause 14 of the Concession Agreement applies.

11. Clause 14 of the Concession Agreement applies to cases in which applica- tion is made for a licence to sell and distribute electric energy within the Concession Area. The licence granted to the Mining Company is no doubt one to which Clause 42 (ii) of the Concession Agreement applies-it is not a licence " for the sale and distribution of electric power "and Clause 14 of the Concession Agreement does not therefore apply, and consequently the Power Company are not relieved of the obligations imposed by Clause 26 of the Concession Agreement.

12. Clause of the Concession Agreement provides that the Power Company "shall subject to the provisions of this Agreement make construct operate in the Concession Area

the works hereinafter referred to together

with any other works from time to time approved by the Government."

and

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