KUALA LUMPUR: 1Malaysia Development Bhd (1MDB) has signed a cooperation framework agreement with the state-owned State Grid Corp of China (SGCC) to start negotiations on setting up a joint-venture company to undertake projects in the Sarawak Corridor of Renewable Energy (Score).
In a joint statement released after the signing yesterday, 1MDB and SGCC said: “The two companies intend to jointly pursue a variety of projects in Score, with the ultimate intent to act as major investors in Score as a whole.
“The projects currently envisaged by the two companies may create as much as US$11 billion (RM36.74 billion) worth of economic value.”
The two companies also said they would work together to engage the relevant authorities in both countries on legal compliance and securing project approvals.
Prime Minister Datuk Seri Najib Razak, who is also chairman of 1MDB’s board of advisers, said the Chinese had expressed interest in possible ventures in Score when he had visited the nation in June last year.
“Now, within a very short period, 1MDB and China’s state-owned SGCC, which is China’s leading power transmission and distribution company, will be collaborating to identify, plan and execute a number of multi-billion ringgit joint projects in Score.
“I understand that these projects will have a potential value of US$11 billion,” Najib said, who witnessed the signing ceremony as well as launched the opening of 1MDB’s corporate head office here. No press conference was held after the event.
He also said the entry of SGCC and its investment in Score would be an added boost to economic ties between Malaysia and China, and pave the way for “more substantial investments from China and globally” into Malaysia.
Meanwhile, SGCC president Liu Zhenya said 1MDB represented a very important partner for the state-owned utility in Malaysia.
He also said the Chinese government was very supportive of Chinese enterprises’ move to be extensively involved in infrastructure projects here.
“Our government highly values SGCC’s participation in this project and has rendered great support in various aspects,” he said.
1MDB’s venture with SGCC follows a JV with Saudi Arabia’s PetroSaudi International Ltd, where it is to invest US$1 billion, with PetroSaudi to invest US$1.5 billion, although the parties have yet to announce what projects they will be investing in.
Meanwhile, Najib also announced yesterday the establishment of the 1MDB Foundation to manage a RM100 million corporate social responsibility fund.
He said the foundation would soon launch several key measures to bridge socio-economic gaps and among others, promote equal opportunity to education and quality of life for all Malaysians.
This article appeared in The Edge Financial Daily, January 12, 2010.