KUALA LUMPUR (AUG 6): Tanah Makmur Bhd’s unit, Sri Jelutung Palm Oil Mill Sdn Bhd (SJPOM), has inked three separate agreements today to build a biogas plant in Pahang for an estimated RM11 million.

The three agreements are shareholders agreement; a build, own, operate and transfer (BOOT) biogas plant agreement; and a land lease agreement, according to Tanah Makmur’s statement today.
 
Tanah Makmur said the agreements were entered into in relation to the expansion of SJPOM’s palm oil mill processing capacity from 30 tonnes per hour (tph) to 45 tph.
 
This was after the new regulation imposed by the Malaysian Palm Oil Mill Board, which requires any upgrading of an existing palm oil mill to obtain a biogas plant, in line with mitigating the greenhouse gases effect. The biogas plant will capture green house gases, especially methane gas, from the effluent pond, it added.
 
Under the shareholders’ agreement between SJPOM and Biopower Climate Care Holding Sdn Bhd (BPCCH) & Metro Havana Sdn Bhd (MH), SJPOM will acquire 30% equity shares in MH, and BPCCH will hold 70% equity shares in the company.
 
BPCCH is a wholly-owned subsidiary of Cenergi SEA, which in turn is a wholly-owned unit of Khazanah Nasional Berhad. Cenergi SEA has a track record of operating biogas plants, including its recent biogas project in Pahang.
 
Metro Havana, a special purpose vehicle, will undertake the designing, engineering, financing, construction, commissioning, ownership, operation and maintenance of the biogas plant.
 
“The biogas plant is expected to incur a capital expenditure of RM11 million. The capital expenditure will be funded through internally-generated funds and external borrowings,” Tanah Makmur said.
 
The working capital will be injected by SJPOM and BPCCH in their respective shareholdings proportions, as and when required. To carry out the business, SJPOM shall inject RM663,000 cash (30%) and BPCCH will RM1.547 million cash (70%) into the company, Tanah Makmur said in its filing to the Bursa Malaysia.
 
Under the BOOT agreement, Metro Havana will process palm oil mill effluent supplied by SJPOM to extract the methane gas to generate and sell electricity to Tenaga Nasional Berhad (TNB), under the Sustainable Energy Development Authority Malaysia (SEDA) programme, it said.
 
The approval from SEDA was obtained on March 4, 2015. It is expected to supply electricity to TNB, from January 2017 onwards.
 
The said plant will be transferred to SJPOM at a minimal consideration at the end of the BOOT agreement, which is 16 years from its commercial operation date.
 
Lastly, under the land lease agreement, Tanah Makmur shall grant Metro Havana a lease and the latter shall accept the lease over the demised premise, the easement and the exclusive licence to use the lagoon, subject to certain terms and conditions, said Tanah Makmur.
 
Tanah Makmur closed unchanged at RM1.38 today, for a market capitalisation of RM549.46 million.