KUALA LUMPUR (April 26): Tenaga Nasional Bhd's (TNB) wholly-owned subsidiary TNB Fuel Services Sdn Bhd (TNBF) has signed five long-term contracts of affreightment (COA), valued approximately at US$537million (RM2.3 billion) for the shipment of coal from Indonesia.

TNBF is the nominated coal and fuel supplier to TNB and the independent power producers that have power purchase agreements with TNB.

In a filing with Bursa Malaysia today, it was revealed the contracts, which have durations of 10 years for second-hand vessel and 15 years for newbuilding vessel, were inked with four Malaysian shipping companies, namely PNSL Bhd, Prima Shipping Sdn Bhd, Duta Marine Sdn Bhd and Malaysian Bulk Carriers Bhd (Maybulk).

The contracts with PNSL are for the consecutive voyage charter (CVC) second hand with a vessel size of 70,000mt +/-10%, for 1.5 million tonne per annum (Mtpa) with an estimated contract value of about US$99 million for a 10-year period, and for the CVC second hand with a vessel size of 80,000mt +/-10%, for 1.5 Mtpa with an estimated contract value of US$95.4 million for a 10-year period.

TNBF's contract with Prima Shipping involves a CVC second hand with a vessel size of 70,000mt +/-10%, for 1.5 Mtpa with an estimated contract value of US$99 million for a 10-year period.

As for Duta Marine, the contract would involve a CVC second hand with a vessel size of 70,000mt +/-10%, for 1.5 Mtpa with an estimated contract value of US$100.5 million for a 10-year period.

Meanwhile, Maybulk's contract involves CVC newbuilding with a vessel size of 80,000mt +/- 10%, for 1.5 Mtpa with an estimated contract value of US$143.1 million for a 15-year period.

"The awarding of the long-term COA reflects TNBF's commitment to promoting and nurturing the growth of Malaysian-owned shipping companies which eventually will allow them to own and/or operate Malaysian-flagged vessels.

"Simultaneously, the long-term COA allows TNBF to diversify its freight contracts' portfolio to 60% term COA, 20% spot contract and 20% long-term COA, subject to the market condition," read TNB's statement.

As the long-term COA commence, the total allocated 7.5 Mtpa is actually less than 30% of the total shipping services required by TNBF in 2016 of 27 Mtpa.

By 2019 when the requirement is anticipated to be around 40 Mtpa, the long-term COA will contribute to about 18.75% of the total shipping services.

The long-term COA is planned for shipments of coal from Indonesia since almost 60% of the coal procured by TNBF is from this country to the three discharge ports, namely Lekir Bulk Terminal (Manjung), Jimah Power Plant (Jimah) and Tanjung Bin Power Plant (Tg Bin).

TNB's shares ended the day down 10 sen or 0.69% to RM14.40 for a market capitalisation of RM81.38 billion.