Results for Prai, 1st generation PPAs out next month

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KUALA LUMPUR: The winning bidders for the Prai Combined Cycle Gas Turbine (CCGT) plant and the re-negotiation of the first generation power purchase agreements (PPAs) are expected to be announced within the next couple of weeks, according to the Energy Commission (EC).
“We have made our recommendation to the government on both Tract 1 (Prai) and Tract 2 (first generation PPAs).
“We are now awaiting government approval, and the results should be announced next month,” EC chairman Tan Sri Tajuddin Ali told a press conference during the Fourth Energy Forum yesterday.
He declined to disclose the number of companies the EC had recommended to the government, but added that the EC would soon call for bidding for Tract 3. Bids for the first two tracts closed in July.
Eight power players had submitted their bids for the Prai CCGT, while four independent power producers and Tenaga Nasional Bhd bid for the first generation PPA extension.

(From left) Energy Commission CEO Datuk Ahmad Fauzi Hasan, Energy, Green Technology and Water Ministry deputy secretary general Datuk Badaruddin Mahyudin, Energy, Green Technology and Water Ministrysecretary general Datuk Loo Took Gee, Chin, Tajuddin, Malaysian Gas Association president Datuk Dr Abdul Rahim Hashim and Energy Council of Malaysia president Datuk Abdul Razak Abdul Majid at the launch of the forum yesterday.

According to the Energy, Green Technology and Water Minister Datuk Seri Peter Chin Fah Kui, the competitive bidding for Prai will result in new capacity to be installed using the latest gas turbines of significantly higher efficiency to optimise the use of gas.
“Upon completion, the newly developed gas turbines could surpass the 60% efficiency in combined cycle mode, marking another first for the country,” said Chin in his opening address at the forum.
In his speech, Chin said Malaysia’s final energy demand is projected to grow at 3.4% per annum, reaching 92.9 million tonnes of oil in 2030, which is twice more than what was required in 2010.
“The total gas consumption in the peninsula has risen by 13% over the last decade, and the bulk comes from the non-power sector that has been driven by heavily subsidised gas pricing.
“This has strained Malaysia’s supply infrastructure, causing frequent supply disruptions. Hence, Malaysia is facing major energy challenges as we are fast moving towards becoming a country that has to rely on imports to meet out domestic energy needs,” said Chin.
During the press conference, when asked whether the purchase of IPPs by government-linked 1Malaysia Development Bhd (1MBD) was part of the government’s strategy to secure supply, Chin said the owner of the power is not a concern, but the price is.
“I cannot speak on behalf of 1MDB, but from the ministry’s point of view, the important factor is the unit price for power, which is determined through competitive bidding. Who owns it is not our concern, but the price being offered is the bigger factor,” he said.
1MDB has been causing ripples in the power sector since its purchase of Tanjong Energy Holdings Sdn Bhd in March for RM8.5 billion. Subsequently in August, 1MDB announced it was buying the Genting Group’s power unit, Genting Sanyen Power Sdn Bhd, for RM2.3 billion.

This article is appeared in The Edge Financial Daily on 28 September, 2012.