Damansara Realty may join the power game

  • Business
  • Saturday, 31 May 2014

UNFANCIED property development company Damansara Realty Bhd is speculated to be a beneficiary for the job to build a gas-fired power plant in Johor called Project 4A.

This is on account that the new major shareholder of the company, that has interest in facilities management services, car park operations apart from property development, is linked to the royalty in Johor.

Damansara Realty recently saw well-connected businessman Datuk Daing A Malek Daing A Rahaman emerging as a controlling shareholder after he acquired a 51% block in the company from Johor Corp at 50 sen a share.

Daing A Malek is a member of the Council of the Royal Court of Advisers to the Sultan of Johor is said to be a close associate of the Johor royalty.

The Sultan of Johor has already registered his interest in venturing into the power generation business through SIPP Power Sdn Bhd.

YTL Power International Bhd is the major shareholder of SIPP Power.

In August last year, SIPP Power Sdn Bhd, a joint venture between the Sultan and YTL Power submitted the lowest bid to Energy Commission (EC) to build a 2,000MW coal-fired power plant. However, the contract was awarded to 1Malaysia Development Bhd (1MDB) based on technical grounds.

SIPP had originally partnered Formis Resources Bhd, which has since pulled out of the tender.

For the new power plant, industry officials do not discount Damansara Realty having an interest considering that it is one of the listed companies whose shareholders are linked to the Johor royalty.

It has not been established if the Sultan and YTL will team up again to bid for the Project 4A.

For now, AmResearch says Tenaga Nasional Bhd is still a strong candidate for the project, given that it is the sole off-taker for power generation in Peninsular Malaysia. Also, for Project 4A to be fast-tracked, TNB needs to expedite the completion of the 500-kilovolt southern line, which links Lenggeng in Negri Sembilan to Yong Peng, Johor, from an earlier schedule in December 2018.

“For Project 4A, we are uncertain at this stage which party will secure it as there is likely to be strong political opposition to the EC’s policy reversal. TNB’s unions have recently expressed their concerns to the EC chairman,” AmResearch adds.

According to analysts, TNB currently appears to be a strong candidate for this project, given that it is the sole off-taker for power generation in Peninsular Malaysia

Apart from his interest in the power sector, the Sultan has also declared his interest to be involved in the corporate world.

The Sultan has also been speculated to partner 1MDB on the proposed project. However, analysts say 1MDB too has the capabilities to bid for the project on its own.

Analysts say the YTL Power site in Pasir Gudang and 1MDB’s Genting Sanyen site in Kuala Langat, Selangor are suitable locations for the Project 4A. YTL Power’s concession in Pasir Gudang and Paka are slated to end next year.

First generation IPPs that have been awarded with an extension of 10 years to their PPAs are 1MDB’s Genting Sanyen and Segari Energy Ventures Sdn Bhd (a subsidiary of Malakoff). TNB Pasir Gudang has been awarded a five-year extension to its PPA.

The demand for electricity in Johor is expected to surge especially in areas within the southern part of Johor and in Johor South-East where various economic activities are currently taking place.

Industry players say activities in Iskandar Malaysia would be the major factor to push up demand for electricity.

In addition, with Johor’s plan to transform the state into a new regional oil and gas (O&G) hub in line with the Economic Transformation Programme was another factor that would contribute to the surge in power demand in the state.

In a recent closed-door meeting, Datuk Rozimi Remeli, TNB vice-president (transmission) says TNB would spend RM8.48bil over four years to boost its electricity transmission network, as it steps up investments in new technology such as “self-healing systems” to reduce blackouts and keep up with the fast-growing demand for power in new growth areas.

The national utility company said the overall transmission network planned for Nusajaya development would cost about RM961mil.

The country’s average growth of electricity demand from 2014 to 2018 is expected to be 3.31%. In 2013, the electricity demand peak at 16,562MW and this is expected to reach 19,492MW in 2018.

No doubt the Sultan of Johor wants a piece of the action in the power sector given that Iskandar Malaysia will continue to be a high growth area for electricity demand in the region.

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Business , Sultan Johor , Power plant , project 4A


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