JAKS eyes IRR of 12% for RM7bil Vietnam plant

HANOI, Vietnam: JAKS Resources Bhd is eyeing an internal rate of return of 12% for its Vietnam US$1.87bil (RM7.52bil) coal-fired thermal power plant project independent power plant (IPP) project.

The company’s chief executive officer Andy Ang said after a ground breaking ceremony of the IPP here on Sunday that he was happy with the returns of the effort that had been put in over the years to bring this project to fruition.

“The break-even should be slightly longer than eight years. Bear in mind the concession period is 25 years,” he told reporters here in the outskirts of Hanoi at Hai Duong Province where the plant will be located.

He also said that the project which will be led by the China Power Engineering Consulting Group Co Ltd (CPECC) may be complete earlier than scheduled in 2020.

“We will complete within the time period. In the contract it is supposed to be year 2020 but we are thinking of shortening the time,” he said.

Ang said that JAKS originally got interested in investing in Vietnam back in 2006 and that he was happy that the years of investing both money and time into this market was bearing fruit today.

“We think there is a big potential in Vietnam given the population dynamics with the bulk of the population here being under 30” he said.

“We foresee that we will invest more in this country. We think it offers us plenty of opportunities,” he said without elaborating..

JAKS expects works on the Vietnam IPP to have a positive impact on its construction division from the financial year 2016 ending Dec 31, 2016.

“We are very excited with the company’s prospects. This IPP project in Vietnam and its accompanying engineering, procurement and construction (EPC) contract for JAKS has helped in our diversification strategy,” he said.

Ang said that its outstanding orderbook at the moment was RM2.7bil which included the Vietnam IPP works.

The IPP project will be funded on a debt to equity capital structure of 75:25.

EPC contract 1 for the IPP, valued at US$1.06biln (RM4.26bil) was earlier awarded to a CPECC-led consortium.

JAKS’ unit Golden Keen Holdings Ltd was in turn awarded the EPC contract 2 of US$454.5mil (RM1.83bil) to carry out the civil and M&E engineering works.

The company will enjoy recurring income from this IPP for 25 years from the date the plant commences commercial operation in 2020.