TNB rises 12 sen after reports it may take over Project 3B from 1MDB

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KUALA LUMPUR (Feb 9): Shares of Tenaga Nasional Bhd (TNB) rose 12 sen or 0.81%  to RM14.94 following reports the government-linked company may take over the Project 3B power plant to be constructed in Jimah, Negeri Sembilan.

As at 11.05am, a total of 1.35 million shares had changed hands.

The Edge Weekly had reported that TNB (fundamental: 1.3; valuation: 1.8) might step in to take over the delayed 2,000MW coal-fired power plant Jimah East as government-owned 1Malaysia Development Bhd (1MDB) wrestled with financial difficulties and the listing of its power assets.

According to the report, the Energy Commission (EC) fears that any further delay in the construction of the power plant, which is expected to begin operations in November 2018, may lead to a power shortage.

It said the EC and TNB were in informal consultations to explore options, including the possibility of TNB holding a 70% stake with Japan’s Mitsui and Co owning the remaining equity interest, as the foreign partner.   

The financing and development of the power plant is a 70:30 joint-venture between 1MDB and Mitsui and Co in Jimah East Power Sdn Bhd.

The possible roping in of TNB follows the tight deadline for  1MDB to secure RM8.4 billion by mid-April to finance the construction and development of the Jimah East power plant.

Failure to secure the funding could jeopardise the listing of its energy unit Edra Global Energy Bhd, which has already been postponed several times.       

TNB is also reportedly seeking a two-month extension to submit documentation for the the 1,100MW to 1,400MW gas turbine plant it is developing with Sultan of Johor’s SIPP Engineering Sdn Bhd.    

However, the extension sought by TNB is unlikely to cause a serious delay to the project, the report stated.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)