This article first appeared in The Edge Financial Daily, on May 6, 2016.

KUALA LUMPUR: Tenaga Nasional Bhd (TNB) yesterday signed a power purchase agreement (PPA) with Pengerang Power Sdn Bhd to buy 600mw of electricity over a 21-year period.

The utility giant said Pengerang Power, an indirect wholly-owned subsidiary of Petroliam Nasional Bhd (Petronas), had been tasked to design, construct, own, operate and maintain a co-generation facility with a nominal capacity of 1,729mw in Pengerang, Johor.

“This PPA is the first of its kind as the Pengerang Power co-generation facility will be selling to TNB 400mw of generating capacity and electrical energy slated to commence from the first scheduled commercial operation date of June 1, 2017,” TNB said in a filing with Bursa Malaysia.

It said an additional 200mw is scheduled to commence from Jan 1, 2019, bringing to 600mw the total generating capacity and electrical energy to be supplied to TNB.

“The PPA will be for a period of 21 years from the first commercial operation date,” it added.

TNB said the signing of the PPA will have a neutral impact on its earnings over the term of the agreement.

TNB’s share price has been on the rise since Aug 24 last year, surging by RM3.89 or 37.8% to RM14.10 yesterday, with a market value of RM79.46 billion.