KUALA LUMPUR (June 18): Tenaga Nasional Bhd (TNB) is buying 1Malaysia Development Bhd's (1MDB) 70% stake in Project 3B, a 2,000-megawatt (MW) coal-fired power plant in Jimah, Negri Sembilan. This is part of the strategic development company's plans to monetise its wholly-owned unit Edra Global Energy Bhd this year.

Energy, Green Technology and Water Minister Datuk Seri Maximus Ongkili said the Cabinet gave its nod for TNB's takeover of Project 3B, for an undisclosed sum.

He added that the Cabinet gave its approval to TNB's takeover deal after the national utility expressed its interest, and "having considered all factors".

"We could have gone for an open bidding (but) because the project has been delayed, it needs to be given priority," he told reporters at Parliament lobby today.

He said TNB was given the approval to take over the project because the job needed to get off the ground fast and could build the plant at an "acceptable rate".

Ongkili also said TNB has requested a small revision to the tariff rate because the project is six months late and that the exchange rate has changed.

"But the (tariff) rate is between TNB and the government and that is yet to be finalised," he added.

Earlier in Parliament, Ongkili said the remaining 30% stake in the project will stay with Japan's Mitsui Co Ltd.

Cash-strapped 1MDB won the project with its consortium partner Mitsui in a controversial open tender last year, beating YTL Power International Bhd, TNB and Malakoff Corp Bhd. But it faced difficulties in undertaking the project that was estimated to have an internal rate of return of only 6%.

TNB shares plunged as much as 5% on news of the buyout. As at 2:52pm, TNB (fundamental: 1.3; valuation: 1.8) fell 66 sen to RM12.50, launching it to the top spot in the exchange’s top decliners today. The stock saw some 4.63 million shares done.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)