KUCHING: Sarawak Cable Bhd (SCB) is expected to commission its hydro dam project in Medan, north Sumatra, Indonesia by October this year after a delay of three years
The hydro dam itself is finally completed and works ar now underway to complete the overhead power lines to connect the dam to Perusahaan Listrick Negara, the Indonesian utility body (PLN) substation.
“The overhead lines are progressing well
“However, work was interrupted as Indonesia is observing a lockdown in view of the Covid-19 pandemic.We have obtained consent to resume work partially and based on the revised timeline, the hydro dam is expected to be commissioned by end of October 2020.
“Due to the travel restrictions as a result of the lockdown we have had to defer some works until the Indonesian authority liberalise their travel restrictions.
“In any event, the company has taken pre-emptive measures by engaging our foreign consultants, Flovel, to proceed with preparations for testing and commissioning (of the dam) via video conferencing, ” SCB said in its latest update on the delayed project when releasing its January-March 2020 quarterly results.
Earlier, media reports said SCB was investing RM80mil in the 10MW hydro dam project
However, the costs have over-run due to the delays as the project has encountered several technical problems, and this has caused a cash crunch to the company.
The project is the first major overseas investment of SCB, which is Malaysia’s largest integrated manufacturer of power cables and conductors.
According to managing director Datuk Ahmad Redza Abdullah, the hydro dam project was under severe pressure as it achieved only about 60% physical completion in 2018 and because its financiers were no longer supporting the project.
He recalled that the company’s board of directors had then make it an urgent priority to complete the project.
“This meant having to resolve issues with local contractors in Indonesia, realign relationship with PLN and yet manage to complete this project using almost entirely internally generated funds.
“The management was also compellled to resolve some shareholding issues with previous Indonesian associates in our subsidiary PT Inpola Mitra Elektrindo (PT IME), ” he added in the company’s 2019 report released last week.
Redza said engagement and joint inspections with PLN have been very positive to the extend that this project which is delayed by three years is now on track with the necessary approved extension of time by PLN.
“It would not overly optimistic to say that we are merely awaiting some completion of minor works before we embark on testing and commissioning of the hydro plant, ” he said. PT IME has signed a 20-year power purchase agreement with PLN, and the concession is renewable. Sarawak Cable has a 78% stake in PT IME.
The commissioning of the hydro power plant will generate a new stream or income for debt-laden Sarawak Cable, and according to earlier media reports, the project would bring in up to RM30mil in annual recurring revenue. Redza said Sarawak Cable is currently in negotiations to procure a power grid project estimated to be worth RM270mil.
He said the group’s cable and wire business segment had a healthy order book of about RM510mil as at end-2019.
Sarawak Cable, which has total borrowings of about RM484mil as at March 31,2020, received approval in August 2019 from the Corporate Debt Restructuring Committee (CDRC) under the purview of Bank Negara to help mediate between the group and its lenders on the loans under a restructuring exercise.
“Our cables and wires including steel fabrication segment has always remained profitable and independently able to meet all its financial obligations. It is on this note that the cables and wires, and steel fabrication segments have exited the CRDC programme.This means that (our subsidiaries) LCIB (Leader Cable Industry Bhd) UCMB (Universal Cable (Malaysia) Bhd), UCS (Universal Sarawak Sdn Bhd) and STSB (Sarwaja Timur Sdn Bhd) are no longer part of the CRDC scheme since December 2019, ” said Redza.
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