KUALA LUMPUR: A six-month delay in the construction of the Tanjung Bin and Jimah East power plants would result in additional fuel costs amounting to RM965.91 million, said the Association of Water and Energy Research Malaysia (Awer).

Its president Piarapakaran S said it had raised the issue of delay in the construction of the two projects several times, but the Energy Commission (EC) had been tight lipped on the issue.

Malakoff Corp Bhd’s 1,000mw Tanjung Bin coal power plant is scheduled to be completed by March 2016, but is expecting a six-to-12-month delay.

“Based on Awer’s modelling, the additional fuel cost that will be passed to tariff for a six-month delay is RM321.97 million and for a one-year delay can be around RM643.94 million for 1,000mw,” Piarapakaran said in a statement yesterday.

At the same time, 1Malaysia Development Bhd (1MDB) is applying for a six-month extension within a year of winning the Jimah East 2,000mw coal power plant. Jimah East coal power plant is scheduled to be completed by end-2018 (first unit) and mid-2019 (second unit).

Awer estimated that a six-month delay in completion of Jimah East 2000mw coal power plant will result in additional RM643.94 million in fuel cost.

As such, the association is calling for the government to cancel the award of the Jimah East project to 1MDB and call for a new competitive bidding to construct a combined cycle gas turbine (CCGT) power plant instead, which takes about 32 to 36 months to complete, to avoid a serious electricity supply security breach.

Alternatively, the government should ensure 1MDB bears all the additional costs including fuel cost and capacity charges due to a delay in the completion of the Jimah East project, said Piarapakaran.

Another option is that additional cost due to delay in the completion of the Jimah East project will be paid by the Cabinet and ministry officials who allow the project extension, he said.

Piarapakaran also said the rationale behind Awer’s suggestion to replace the coal power plant with CCGT is that leaving the electricity generation mix at 29% natural gas and 64% coal by 2020, from 52% natural gas and 43% coal last year, will cause more supply risk in the near future.

“CCGT [also] takes a quicker time to complete compared with coal power plant. CCGT takes about three years and a coal power plant takes about four years to be constructed,” he said.

On the Tanjung Bin delay issue, Awer also called on the EC to ensure Tanjung Bin bears all the additional costs due to the delay in the completion of the power plant.

This article first appeared in The Edge Financial Daily, on January 15, 2015.