Tanjung Bin power plant delay a setback to Malakoff’s listing

PETALING JAYA: The delay of Malakoff Corp Bhd’s 1,000MW coal-fired Tanjung Bin power plant is a major setback for the company’s listing exercise, UOB Kay Hian said.

The research house said the Tanjung Bin power plant represented a sizeable 18% of its current effective generation capacity of 5,500 MW and 20% of its 5,020 MW power capacity in Malaysia.

“Hence, it is viewed as a key growth catalyst for Malakoff’s impending initial public offering,” UOB said in a report yesterday.

A financial weekly reported that Malakoff had informed the Energy Commission that its 1,000MW coal-fired Tanjung Bin power plant would be delayed by more than six months due to construction problems. The plant was scheduled for commissioning on March 16, 2016.

Meanwhile, UOB said Malakoff contributed 24% or RM2.9bil of MMC Corp Bhd’s revised net asset values (RNAV) and the listing of Malakoff could unlock an additional RM2bil or 65 sen per share in RNAV for MMC.

It said coal generation cost was lower than that for gas at current market prices, of which any major delays of the coal-fired plants would also impact Tenaga Nasional Bhd long-term earnings visibility if Tenaga were not compensated for such delays.

“We estimate the delay could drag industry reserve margin down to 20% in 2016, while any potential delay in 1MDB’s 2,000MW coal-fired power plants scheduled for commission in 2018 and 2019 could result in industry reserve margin falling further to 16% by 2019 from the current 24%,” it said.

MMC shares closed 12 sen lower at RM2.67 with 606,400 shares changing hands.