KUALA LUMPUR (Oct 16): Plans by Tenaga Nasional Bhd (TNB) and SIPP Energy Sdn Bhd to develop a new 1,000-1,400 megawatt (MW) combined cycle power plant in Pasir Gudang, Johor, also known as Track 4A project, have fallen through, after the Energy Commission (EC) rejected the consortium’s project proposal.

Following the decision made by the EC, TNB said it will exit from the consortium formed with SIPP Energy in July last year to undertake the development of the Track 4A project.

In a statement today, TNB said the reason why the consortium's proposal, which was submitted on May 15, was not accepted was because the levelised tariff could not meet the EC’s terms in the conditional letter of award.

“Following the decision made by the EC, the Heads of Agreement (HoA) had lapsed and TNB ceased to be part of the consortium,” TNB said in a separate filing with Bursa Malaysia today.

In June last year, the EC had awarded Track 4A project to the consortium consisting YTL International Power Bhd, TNB and SIPP Energy, which is linked to the Johor royalty, via direct negotiation to meet the country’s growing needs for power. The plant was scheduled for commissioning in 2018.

However, YTL International had later backed out of the consortium.

On July 24 last year, TNB announced that it had signed a HoA with SIPP Energy to outline the principal terms of the proposed joint venture (JV) to build, own and operate the  power plant in Pasir Gudang.

The EC had set a condition that in the awarding of the project that the tariff should be comparable to the 34.7 sen per kilowatt-hour tariff that TNB had offered for the 1,071MW Prai combined cycle gas turbine power plant that the utility company had clinched in 2012 from a competitive tender.

TNB shares closed two sen or 0.16% higher at RM12.80 today, bringing a market capitalisation of RM72.24 billion. 

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