Tenaga Nasional Bhd (TNB) logo is seen on the signage at its power station in Malacca at sunset. (Pix taken by M. Hafidz Mahpar for Star Online)
KUALA LUMPUR: Tenaga Nasional Bhd
(TNB), which in 2015 withdrew from a consortium to develop a power plant in Pasir Gudang, Johor, has made a U-turn and taken a majority stake in the RM4.7bil project.
In a filing with Bursa Malaysia on Wednesday, the utility giant said it was buying a 51% stake in Southern Power Generation Sdn Bhd, the special purpose vehicle to develop the 1,440MW combined-cycle gas turbine power plant, for RM51.
The vendor, SIPP Energy Sdn Bhd, owns the other 49% stake.
The project, code named Project 4A, was initially awarded to a consortium comprising SIPP Energy, YTL Power International and TNB through direct negotiation in May 2014, but the latter two pulled out.
It was reported that YTL Power dropped out of the consortium early on - in June 2014 - amid criticism that the project was awarded on a direct negotiation basis as opposed to through competitive bidding.
Industry sources said TNB withdrew in 2015 after the Energy Commission rejected the SIPP-TNB’s tariff proposal.
In Wednesday’s announcement, TNB revealed the plant (whose commercial operation had originally scheduled to start in June 2018) was now expected to start running on July 1, 2020.
“The project will enhance TNB’s generation capacity and will give a positive impact on TNB’s earnings, and in return it will add long-term value for TNB’s shareholders,” the company said without disclosing the tariff for the project.
The project cost would be financed through a combination of project finance and equity, it said.
“Any debt to be raised will increase TNB’s consolidated gearing, the quantum of which is dependent on the amount borrowed. The acquisition, however, is not expected to have a material effect on TNB’s gearing position,” TNB added.
SIPP Energy received the Government’s green-light to build the Pasir Gudang power plant last year and has signed a 21-year power purchase agreement with TNB.
In September last year, TNB announced that the plant, to comprise two generating blocks with a capacity of 720MW each, would start commercial operation by Jan 1, 2020.
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