PETALING JAYA: The Energy Commission (EC) has rescinded the proposed 300MW power plant project in Sandakan that was awarded to Ranhill Holdings Bhd’s unit.
In a filing with Bursa Malaysia yesterday, Ranhill said the EC had issued a letter to the consortium consisting of Sabah Development Energy (Sandakan) Sdn Bhd (SDESB) and Ranhill’s unit, SM Hydro Energy Sdn Bhd (SMHE), informing them of the cancellation of the proposed project.
“In its letter, the EC stated that it was informed by the Energy, Science, Technology, Environment and Climate Change (ESTECC) Ministry through a letter dated Oct 25, 2018 that the government had decided to rescind its decision on the implementation of the project.”
To recap, Ranhill, via wholly-owned SMHE, which has a 30% stake in the consortium received a conditional letter of award in February from the EC to develop a combined-cycle gas turbine plant in Sandakan, Sabah.
The consortium was also instructed to commence negotiations with Petronas and the company identified by the government to develop the Trans-Sabah Gas Pipeline (now cancelled) to ascertain terms and conditions of gas supply for the project.
MIDF Research in a recent note said the plant was originally intended to partly address the severe power under-capacity in East Sabah.
“The change in government brought uncertainty to the project, as the new ESTECC Minister instead prefers to strengthen the West-to-East grid to enable a more efficient supply of power from west (oversupplied) to east Sabah (undersupplied).
“The grid upgrade (targeted to complete at end-2019 involving the Segaliud-Dam Road-Kalumpang transmission) will enable an additional 200MW to be dispatched from west Sabah,” it said.
The research house added that it sees no impact on the valuation of Ranhill.
“Given the uncertainties surrounding the project, we had already conservatively excluded the project from our forecasts and valuations for Ranhill,” it said.