KUALA LUMPUR (Oct 26): Power producers in Malaysia will not see any impact on earnings from the cancellation of four independent power producer (IPP) contracts announced yesterday, analysts said.

As the projects were still in planning stages and not announced as part of the timeline of firms including Tenaga Nasional Bhd and Malakoff Corp Bhd, these companies will not see their existing portfolio and earnings affected, PublicInvest Research said in a note today.

Yesterday, Minister of Energy, Science, Technology, Environment and Climate Change Yeo Bee Yin said the four cancelled projects were Malakoff and Tenaga's 700MW gas powered plant in Kapar, Selangor; the Aman Majestic Sdn Bhd and Tenaga's 1,400MW plant in Paka, Terengganu; the Sabah Development Energy (Sandakan) Sdn Bhd and SM Hydro Energy Sdn Bhd hydropower plant at the Palm Oil Industrial Cluster (POIC) in Sandakan, Sabah as well as the solar power quota of 400MW to Edra Power Holdings Sdn Bhd for the utilisation of solar power plant.

MIDF Research said in its report today that the cancellation of the plant in Sandakan was not entirely a surprise as SM Hydro Energy, a 100%-owned unit of Ranhill Holdings Bhd, had previously been involved in negotiations to develop the now-cancelled Trans-Sabah Gas Pipeline.

CIMB Research, however, viewed the cancellations of the four IPP contracts as "just the beginning", it said in a note on Oct 25.

"We keep our Neutral stance on the overall utilities sector as there could be more changes in regulations and policies," it said, adding that structural reform for the sector will likely be announced early next year.

Shares in Tenaga rose in early trade today after declining since the beginning of the week. By noon break, the stock was up 8 sen or 0.57% to RM14.08.

Ranhill was also up, gaining 4 sen or 4.35% to 96 sen, although Malakoff remained unchanged at 82 sen.

Yesterday, Malakoff had declined 4 sen or 4.65% on the minister's announcement of the projects that were cancelled.