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Wednesday October 21, 2009

Privatisation of Sarawak Energy to ease plans for aggressive expansion

By FINTAN NG


PETALING JAYA: The offer by the Sarawak government to privatise Sarawak Energy Bhd may be due to financing as the latter has plans to aggressively increase hydropower generation capacity.

The state government, through the State Financial Secretary, has a 64.65% stake in the company.

On Monday, a wholly-owned entity of the state government, Delegateam Sdn Bhd, offered to acquire the rest of the shares not owned by the state government at RM2.65 per share.

An analyst with a bank-backed research house said in a report that “private ownership may offer Sarawak Energy the flexibility to adopt a capital structure that will be consistent with its funding and risk profile”.

He said a reason for the company’s privatisation could be the plans to develop up to 10,000MW of mainly hydro-based generation capacity by 2020, which would involve a rather significant capital expenditure of around RM15bil over the next decade.

He said a private structure could also offer the company more flexibility for internal restructuring if any.

Meanwhile, CIMB Investment Bank Bhd analyst Soh May Yee wrote in a report that the news came as a surprise.

“Unlike most of the past privatisation exercises, which were preceded by talk or press speculation, such talk only surfaced only yesterday (Monday) for Sarawak Energy after its (trading) suspension,” she said.

Soh said the company’s plans to expand installed capacity had been slow and she suspected that financing could be the obstacle.

“We’ll not be surprised if this exercise is a prelude to an upcoming industry restructuring,” she added.

 
SARAWAK :  [Stock Watch]  [News]


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