1MDB to give Jimah an edge

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KUALA LUMPUR: With 1Malaysia Development Bhd (1MDB) as a shareholder, Jimah Energy Ventures Holdings Sdn Bhd now stands a better chance of securing future power concessions, industry observers said.

Last Friday, 1MDB announced it had entered into a conditional share agreement to buy independent power producer Jimah Teknik Sdn Bhd and Jimah O&M Sdn Bhd for RM1.2 billion.

Jimah Teknik and Jimah O&M (project manager, as well as operation and maintenance [O&M] contractor for Jimah Teknik) have 65% and 10% respectively in Jimah.

Jimah's principal asset is a 1,400MW coal-fired Jimah power plant in Port Dickson, Negri Sembilan, in which Tenaga Nasional Bhd (TNB) has a 20% stake while the Negri Sembilan government owns 5%.

Jimah's 1,400MW power plant is one of the country's three major coal-fired power plant sites. It is also the only one that has yet to expand its capacity.

"Jimah participated in the last power concession tenders which went to Malakoff. This time around, with 1MDB it has a better chance of winning concessions," said a source close to Jimah.

Jimah has a 25-year power purchase agreement that will expire in 2033. This represents a third major power asset acquisition for 1MDB since it bought Tanjong Energy, which owns power plants here and abroad, from T Ananda Krishnan and the Genting Sanyen power plants from Genting Bhd.

1MDB is currently in the running for two major coal-fired power concessions proposed by the Energy Commission — Track 3A and Track 3B. 1MDB has proposed Jimah as the site for both tenders.

"However, there is only enough room for another 1,000MW boiler at Jimah's current site," says the source.

The other two major sites with coal-fired plants are Manjung in Perak and Tanjung Bin in Johor.

Jimah's power plant site was proposed for an additional 1,000MW two years ago but it lost out to MMC Corp Bhd's Malakoff Corp Bhd which won the concession to expand capacity in Tanjung Bin instead.

Meanwhile, TNB's plant in Manjung is already entering its fourth phase of expansion and is seen as the front runner for Track 3A, a 1,000MW coal-fired plant.

In fact, 1MDB made its announcement to buy Jimah with the award of Track 3A expected to be unveiled soon.

According to industry sources, TNB is tipped to win Track 3A because it has put in a bid that is lower by two sen per MW hour compared to 1MDB's.

Even if TNB were to win the tender for Track A, 1MDB still has a second shot in Track 3B which has only just finished pre-qualifications.

Besides TNB, the three other consortia in the running for Track 3B are Formis Resources Bhd, YTL Power International Bhd and soon-to-be-listed Malakoff.

This article first appeared in The Edge Financial Daily, on July 8, 2013.