PUTRAJAYA: In a major move that would change the landscape of the power generation sector, the Energy Commission (EC) has decided that only two of the five independent power producers (IPPs) would have their first-generation power purchase agreements (PPAs) extended.
The EC also announced at the press conference yesterday that Tenaga Nasional Bhd (TNB) was the winner of the competitive bid to build a 1,000mw power plant in Prai, Penang, nudging out a strong challenge from the consortium of Pendekar Power Sdn Bhd and Mitsui & Co Ltd.
A unit of Powertek Bhd, Pendekar’s ultimateowner is 1Malaysia Development Bhd (1MDB). TNB and the consortium were the lowest bid, with only 0.1 sen difference between the rates offered.
The decision to only extend the concession of the two IPPs, namely Genting group’s Genting Sanyen Power and Malakoff Corp Bhd’s Segari Energy Ventures, will leave the fate of another three IPPs whose concession ends from 2016 onwards on tenterhooks.
The other three IPPs that failed to get extensions to their concessions were Powertek, also owned by 1MDB, YTL Power Generation Sdn Bhd, which comes under Sime Darby Bhd.
According to EC chairman Tan Sri Ahmad Tajuddin Ali, the Prai combined cycle gas turbine (CCGT) plant is estimated to cost around RM3 billion. The tariff for the 1,071MW Prai plant is 34.7 sen per kWh, and the plant is due to be commissioned by March 1, 2016.
The rate for Genting Sanyen’s 675MW plant is 35.3 sen per kWh under the extended concession, while the rate for Segari’s 1,303MW is 36.3 sen per kWh. TNB Pasir Gudang’s 275MW plant also managed to gain a five-year extension to its existing concession at a rate of 37.4 sen per kWh.
It is not known to the public what the old rates were for all the IPPs.
“Through the concurrent bidding exercises, EC has successfully secured generation capacities to meet the growing demand of electricity starting from 2016 at the lowest cost of energy and with minimum completion risks,” said Tajuddin.
Prai represents TNB’s first big local gas plant project, awarded by an open tender that had closed in July this year.
Beside Pendekar-Mitsui, TNB had beat the likes of a consortium comprising CI Holdings Bhd, Teknologi Tenaga Perlis Consortium Sdn Bhd and Daelim Industrial Co Ltd, the consortium of Malakoff, Petronas Power Sdn Bhd and Mitsubishi Corp, and the consortium of YTL Power International Bhd and Marubeni Corp, among others.
The award gives TNB a chance to prove perception that the utility group is an inefficient dinosaur compared to the sleeker IPPs.
According to Tajuddin, the successful bidders will be required to sign new PPAs, with terms standardised by the EC, which are expected to be done over the next three to four weeks.
For the first generation IPPs and TNB, the new rates must come into effect at least 48 months before the end of their original concession, Tajuddin said.
As for any future plant-ups, Tajuddin said: “We are now preparing a paper to present to the government on this matter.”
According to analysts, regardless of the outcome of the bid for Prai power plant, TNB remains a big winner.
“In the long term, this award through open bidding will be good for Tenaga. Ultimately it means that the capacity charge borne by Tenaga will drop,” said AmResearch.