Tadmax, Kepco in power plant project

KUALA LUMPUR: Tadmax Resources Bhd is teaming up with South Korea’s largest electric utility, Korea Electric Power Corp (Kepco) to develop the proposed RM3.5bil power plant in Pulau Indah, Selangor.

The property development and construction group, which expects its energy segment to start contributing to its profit only after five years, said it signed a joint development agreement (JDA) with Kepco last Friday.

In the filing with Bursa Malaysia yesterday, Tadmax noted that it would continue to be the leading member of the consortium through its project company Tadmax Indah Power Sdn Bhd (TIP).

It said Kepco intended to secure 25% equity interest in TIP on the successful implementation of the JDA, which is subject to the Energy Commission’s (EC) approval.

Listed in South Korea and New York, Kepco is South Korea’s largest state-owned public utility company. It is 51% owned by the Korean government and has assets of US$147bil (RM615.9bil) and annual revenue of US$50bil (RM209.5bil).

The move to bring in Kepco was in order to comply with the EC’s letter dated Sept 13, 2017, for “a suitable and active technical partner” for the project, Tadmax said.

The JDA may lead to a shareholders’ agreement between the parties, it added.

According to Tadmax, the consortium will work together and prepare the technical and financial proposals to be submitted to the EC by Aug 1, 2018.

The EC had in August last year given Tadmax a conditional letter of award for the development of a new 1,000 MW combined cycle gas-fired power plant, to be sited on the group’s existing land in Pulau Indah. Later the commission approved the company’s application to increase the capacity to 1,200 MW.

The award raised questions, as Tadmax had no track record in developing power plants.

When asked whether it was risky to give the project to such a company, EC chairman Datuk Abdul Razak Abdul Majid was reported as saying the commission would ensure the contract winner fulfil the conditions set, including teaming up with an experienced partner.

In May this year, however, Tadmax managing director Datuk Seri Anuar Adam was quoted in a daily as saying that the company would proceed with the project on its own despite receiving the expression of interest from several parties to take up equity.

Tadmax announced in July that it had fulfilled certain submissions requirements as stipulated in the said EC’s conditional letter of award before the due date of Aug 1, 2017.

These included a detailed project feasibility, proof of land ownership, and a banker’s cheque for a value of RM10mil, in place of a commitment bond, renewable on a six-monthly basis till Dec 31, 2018. There was no mention of a potential joint-venture partner.