Power plant projects back in the limelight


  • Corporate News Premium
  • Saturday, 31 Aug 2019

The Pulau Indah power plant is being promoted by Tadmax Resources Bhd. Meanwhile, the power plant in Kedah, which is at the planning stages, is privately held and said to be linked to the state royalty.

TWO power plants – one in Pulau Indah, Selangor and another in Kedah – are back under the spotlight.

The Pulau Indah power plant is being promoted by Tadmax Resources Bhd. Meanwhile, the power plant in Kedah, which is at the planning stages, is privately held and said to be linked to the state royalty.

“A decision on the status of both power plants will be made soon. It is highly unlikely to be cancelled. A decision on the schedule as to when the projects can commence is likely to be made known, ” say industry sources.

The status of both power plants have been uncertain since May 2018 after the Pakatan Harapan government took control of Putrajaya. Since May last year, Tadmax has seen a set of new shareholders coming into the picture.

Tadmax’s deputy chairman Datuk Seri Anuar Adam, who used to be the company’s single largest shareholder and managing director, has cut his stake to 2.79% currently.

A year earlier, Anuar owned 26.43% in the company, held with his deputy and son Datuk Aldillan Anuar.

On Feb 28 this year, Aldillan resigned from Tadmax’s board of directors, saying he intends to “pursue other business ventures”.

Currently, the single largest shareholder of Tadmax is Datuk Kok Boon Kiat with a 8.21% stake.

Four power plant contracts were cancelled in July 2018 following the Energy, Green Technology, Science and Climate Change Minister Yeo Bee Yin’s move to review the country’s power reserve and supply situation.

The projects are the 700MW power plant by Malakoff Corp Bhd and Tenaga Nasional Bhd (TNB) in Kapar, the 1,400MW power plant by Aman Majestic Sdn Bhd and TNB in Paka, Terengganu, and the 300MW combined gas engine power plant by Sabah Development Energy (Sandakan) Sdn Bhd and SM Hydro Energy Sdn Bhd at the Palm Oil Industrial Cluster in Sandakan.

The 400MW solar energy quota to Edra Power Holdings Sdn Bhd was also cancelled.

Currently, Malaysia already has an electricity reserve margin of 35%. It was closer to 40% two years ago.

A quick check on the Malaysia Energy Information Hub portal shows that as of end-2017, the country’s total installed electricity capacity stood at 33,528.08MW.

However, the maximum demand was only at 22,217MW in the same year.

It is also worth noting that Yeo has previously said that Malaysia’s electricity reserve margin could reach a whopping 46% if the government does not cancel certain new independent power producer (IPP) projects.

The speculation on Tadmax’s power plant and another in Kedah comes amid criticism by prominent economist Prof Jomo Kwame Sundaram two months ago that the government lacks political commitment for a renewable energy agenda in Malaysia.

A point of concern with regard to the two power plants is on the potential tariff rate to be decided by the government.

Located in Pulau Indah, Tadmax’s RM3.5bil power plant is some 77km away from the main load centre.

A source says the long distance will lead to power loss during transmission and this comes at a cost.

“This has to be factored into the calculation of tariff rate for the power purchase agreement, ” he says, referring to the price that will be paid by TNB to offtake the generated electricity.

Meanwhile, the related parties for the Kedah power plant has yet to make a financial close for the project.

“Only with financial close can the tariff be decided, ” says a source.

Recall that Tadmax’s contract for the 1,000MW-1,200MW plant was awarded directly in August 2016 by the previous Barisan Nasional government. The project has never been cancelled by the Pakatan Harapan administration, but it has remained mum on the matter for more than a year.

What is notable about the power plant is that Selangor state-linked company Worldwide Holdings Bhd is also a shareholder of the project.

On Sept 14,2018, Tadmax inked a heads of agreement with Worldwide Holdings and Korean Electric Power Corp (KEPCO) for the development of the power plant, subsequent to a memorandum of understanding signed earlier on July 27 last year.

Under the partnership, Tadmax will own 40% of the power plant while Worldwide Holdings and KEPCO will control 35% and 25%, respectively.

Tadmax has previously said that it has submitted its technical and commercial proposal to the commission on July 31,2018. However, the Energy Commission (EC) has continued to delay the approval for the project.

StarBizWeek’s previous attempt to get a clarification from the EC was unsuccessful.

Meanwhile, details remain scarce about the power plant in Kedah, which is yet to be announced. However, a source tells StarBizWeek that the project will be gas turbine-based.

An industry observer says that while the electricity reserve margin remains at a healthy level currently, the government should be more forward-looking in consideration of future demand.

“With greater industrialisation due to Industry 4.0 and other technological advancements such as the increasing use of electric vehicles, the demand for electricity will inevitably rise in the future.

“So, if we don’t build our power generation capacity accordingly, it would be too late by then, ” she says.

Commenting on this, a source says the government could postpone the commencement of a power plant to a later date, even if the contract is awarded in the near term.

“You can award a contract today, but the IPP can be asked to commence operations few years down the road to meet future demand.

“We also have to bear in mind that you can’t build a power plant overnight. It will take some time, considering the process and any unforeseen challenges.

“Take the Track 4A power plant for example. It was awarded in May 2014 but according to news reports, the power plant is now expected to commence only in July 2020, some two years delayed from the earlier target, ” he says.

For now, the power industry is still awaiting the government’s decision with regard to approving new power plant contracts in the country.

It remains to be seen whether the government will opt for conventional fossil fuel-based power plants, despite its target to have 20% of Malaysia’s electricity to be generated from renewable sources by 2030.

Currently, only 2% of the country’s electricity come from renewable sources.

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power , plant , projects , limelight , Selangor , Kedah ,

   

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