This article first appeared in The Edge Malaysia Weekly on February 26, 2018 - March 4, 2018

STATE-controlled utility giant Tenaga Nasional Bhd (TNB) is understood to have shortlisted 15 companies and given them a briefing recently on the plans for the development of its land in Bangsar, Kuala Lumpur, industry sources say. However, some of the players say the list could get longer with a few more companies added to the mix.

“Now there are about 15. I think TNB is looking at 20 companies or so,” says an executive from one of the companies.

A source says the approximately RM1 billion redevelopment is likely to be put out to tender next month.

The shortlist includes Malaysian Resources Corp Bhd (MRCB), IJM Corp Bhd, Muhibbah Engineering (M) Bhd, Mitrajaya Holdings Bhd, Chase Perdana Bhd, Sunway Construction Group Bhd, Zelan Bhd, WCT Holdings Bhd and China State Construction Engineering Corp. Several private companies are understood to be eyeing the large-scale project while some foreign outfits were rejected for not being registered with the Ministry of Finance.

While the plan to develop the land was mooted many years ago, it only started taking shape when TNB and Bayu Mantap Sdn Bhd, a company linked to developer Melati Ehsan Holdings Bhd, signed a development agreement in June 2016. Bayu Mantap is controlled by Melati Ehsan’s largest shareholder, Tan Sri Yap Suan Chee and his family. Yap has a 50.01% stake in Melati Ehsan.

Some of the smaller jobs have already been awarded. For example, MRCB secured a RM40 million contract to build a Balai Islam and staff quarters under Phase 1 of the TNB headquarters campus development in Jalan Bangsar.

The project management company, meanwhile, is Turner Construction Company — the same company that is managing Permodalan Nasional Bhd’s PNB 118 (formerly known as KL 118). The 118-storey, or more than 600-metre, tower is slated to be the tallest building in Malaysia, surpassing the iconic Petronas Twin Towers.

Apart from Turner, the other parties involved include global architecture firm Woods Bagot, which is designing TNB’s new corporate headquarters and will deliver a new campus workplace for the utility giant’s staff.

While most parties involved are keeping mum, the Bangsar development is said to be a mixed-use project with two towers — a 45-storey corporate tower and a 57-storey building with serviced residences and a hotel — and a two-storey commercial development.

There had been plans to develop the land more than 10 years ago but the global financial crisis put the project on hold.

TNB’s latest annual report for 2017 does not have details of its Bangsar land. However, when TNB and Bayu Mantap signed the development agreement, the size of the land was stated as 3.8 acres.

It is noteworthy that the parcel is strategically located close to KL Eco City, and between Jalan Pantai Baru in the north and the Federal Highway in the south.

TNB stated in its 2017 annual report that it had 188.26 acres in Wilayah Persekutuan — both leasehold and freehold — valued at almost RM228 million. The net book value of its land and buildings in Wilayah Persekutuan, meanwhile, is in excess of RM700 million while nationwide, it is a whopping RM14.45 billion.

Considering the development is for TNB, most companies will be keen to participate. With a market capitalisation of close to RM90 billion, it is one of the largest companies in Malaysia.

For the three months ended November 2017, TNB registered a net profit of RM2.15 billion from RM11.61 billion in revenue. Compared with the corresponding quarter a year ago, net profit was up 23.6% while revenue gained 3.3%.

As at end-November last year, TNB had deposits, bank and cash balances of RM5.68 billion while on the other side of the balance sheet, it had long-term debt commitments of RM40.27 million and short-term borrowings of RM1.31 billion. TNB’s net cash flow from operating activities was at RM1.23 billion.

TNB closed at RM15.64 last Friday.  

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