Tanjong to fork out RM70mil a year for windfall tax

KUALA LUMPUR: Based on its current earnings, Tanjong plc expects to fork out about RM70mil per year on windfall tax which was imposed recently on independent power producers (IPPs).

Chairman Datuk Robert Cheim said the windfall tax imposed by the Government would certainly have an impact on the company and all IPPs in the country.

“The tax also has an impact on the bond market. We have appealed to the Government and are waiting for the outcome. We hope it will make a decision soon,” he told reporters after the group’s AGM yesterday.

Last month, the Government announced a 30% windfall tax on audited returns in excess of a benchmark 9% return on assets for IPPs effective July 1.

For the financial year ended Jan 31, Tanjong recorded a net profit of RM554.46mil on revenue of RM2.72bil.

On Tenaga Nasional Bhd’s call for power-purchase agreement renegotiations, Cheim said Tanjong was prepared to enter into negotiations after the windfall tax issue was resolved.

Meanwhile, he said the group would continuously evaluate opportunities for international expansion in the power-generation business via acquisition as a means to boost earnings.

“We are certainly buying more power assets. We want to grow more efficient and get economies of scale with our strategy,” he said, adding that the power sector would remain the group’s key contributor to revenue.

The group is currently looking at both greenfield and brownfield investment opportunities in the Middle East, Africa, India and South Asia.

Cheim said the acquisition of seven Globeleq Ltd power plants in Egypt, Bangladesh, Pakistan and Sri Lanka last November had immediate contribution to its revenue.

Tanjong wholly-owned subsidiary Powertek Bhd's power plant in Telok Gong, Malacca.

Tanjong currently has 13 power plants with a net capacity of 3,951 megawatts.

On the progress of the group’s Tropical Islands project in Germany, Cheim said there were some improvements in operational efficiency and revenue-generation capacity.

“However, the longer-term prospects of Tropical Islands hinge on successfully attracting visitors from a wider target market and the availability of adequate accommodation for long distance travellers to enjoy the whole suite of offerings at Tropical Islands,” he said.

Tanjong was in advanced stages of negotiations with third parties willing to independently finance the development of accommodation facilities and market them internationally, he said.

“Barring any unforeseen circumstances, we hope to conclude these before the end of the year,” Cheim said.

 TANJONG :  [Stock Watch]  [News]

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