KUALA LUMPUR (June 23): Kejuruteraan Asastera Bhd (KAB) has inked a collaborative agreement to enter the renewable energy market in Vietnam.

In a statement, the group announced that its wholly-owned subsidiary KAB Energy Power Sdn Bhd (KABEP) has signed a collaboration agreement with Janakuasa Pte Ltd to explore the renewable energy market in Vietnam.

Under the collaboration agreement, KAB said KABEP and Janakuasa will form a special purpose vehicle to seek to acquire the majority stakes in three hydropower plant projects located in Vietnam, with an aggregate installed capacity of 180MW of power.

The projects have existing power purchase agreements with state-owned utility company Vietnam Electricity, which will expire between January 2030 and 2039, KAB noted, adding that the projects commenced commercial operations between 2015 and 2019.

It added that Janakuasa — a private energy developer company based in Malaysia, Singapore and Vietnam — is currently developing two notable power plants with strong partners, namely a 1,200MW coal-fired power plant in Duyen Hai 2 and a wind power plant with a capacity of 78MW in Hiep Thanh, both located in Vietnam.

KAB managing director Datuk Lai Keng Onn said the collaboration agreement marks a new milestone for KAB.

"This agreement demonstrates KAB's commitment to expanding its green energy solutions division, as well as growing its footprint in the Asian region. We are proud to be given an opportunity to form a synergistic partnership with Janakuasa as we are able to leverage on their experience and know-how.

Concurrently, with the huge growing demand for electricity in Vietnam, we are confident that our first foray into the Vietnamese market will be successful. We look forward to working together with Janakuasa in enhancing our long-term partnership in developing green projects in Vietnam," said Lai.

Meanwhile, Janakuasa chairman Ti Chee Liang said KAB makes a strong strategic long-term partner and believes the partnership will be mutually beneficial for both parties.

"Given that Vietnam is ASEAN's rising star with the most promising economic growth and growing population, demand for energy has increased exponentially.

"The Vietnamese government's commitment to green energy makes the country an attractive investment destination for the development of multiple renewable assets in Southeast Asia," said Ti.

KAB noted in the statement that both KABEP and Janakuasa will actively seek to further increase its renewable portfolio in Vietnam and support the Vietnamese government to meet its renewable energy targets in the shortest possible time.

"Study has shown that Vietnam is one of the most successful ASEAN countries in promoting various types of renewable energy to sustain its energy development and protect its environment with a target to raise the reliance on renewable energy from 0.5% in 2016 to 25% by 2030," it added.

At noon market close, shares in KAB settled 0.72% or half a sen lower at 69 sen, valuing it at RM1.17 billion.