KAB makes foray into hydro power sector in Indonesia

KUALA LUMPUR: Kejuruteraaan Asastera Bhd's (KAB) subsidiary KAB Energy Holdings Sdn Bhd has entered into a term sheet agreement with Sarawak Cable Bhd to acquire the entire issued share capital of PT Inpola itra Elektrindo (PT IME).

In a statement, KAB said PT IME has an existing power purchase agreement to supply electricity to PT Perusahaan Listrik Negara, the state-owned utility company in Indonesia, for a concession period of 20 years.

It operates a mini hydro power plant, named Kombih III, located at Sungai Kombih in North Sumatera.

The plant has an installed capacity of 11-megawatt and achieved commercial operations on 12 October 2021.

According to KAB, the purchase consideration will be RM10,000. Meanwhile, PT IME will be released from all liabilities and encumbrances upon the full settlement of the purchase consideration and outstanding debt of up to RM61.5mil.

"This is our first foray into Indonesia, as well as our maiden venture into the hydro power sector.

"We are excited to embark on this business journey and see this proposed acquisition of PT IME as being in line with the group’s business direction to expand the income stream and have a strong foothold in our green energy solutions business, particularly in the renewable energy sector," said KAB managing director Datuk Lai Keng Onn.

He added that the the higher margins of hydropower assets will yield very profitable returns, and provide a stable and sustainable long-term recurring income for KAB over the next 20 years.

The asset is projected to contribute at least RM270mil revenue to the group over the concession period.

Kombih III is expected to generate about 49,056,000 kWh per annum, which will offset 26,784 tonnes of CO2 emission.
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