Saturday March 17, 2012

Nine shortlisted for Prai power project


PETALING JAYA: Nine consortia and sole bidders have been shortlisted by the Energy Commission (EC) to participate in the tender process for the Prai combined-cycle gas turbine (CCGT) power project.

The consortia comprise 1Malaysia Development Bhd (1MDB), which has teamed up with South Korean conglomerate Hyundai Engineering & Construction; YTL Power International Bhd with Marubeni Corp of Japan; CI Holdings Bhd and Teknologi Tenaga Perlis Consortium Sdn Bhd with Daelim Industrial Co Ltd of South Korea; Amcorp Power Sdn Bhd with Japanese group Mitsui & Co Ltd; and Malakoff Corp Bhd and Petronas Power Sdn Bhd with Mitsubishi Corp of Japan.

Sole bidders are represented by local players, namely, Pendekar Power Sdn Bhd, a wholly-owned subsidiary of Powertek Bhd; Mastika Lagenda Sdn Bhd, an indirect 97.7%-owned subsidiary of Genting Bhd and the holding company of Genting Sanyen Power Sdn Bhd; national power company Tenaga Nasional Bhd; and Sime Darby Power Sdn Bhd of diversified conglomerate Sime Darby Bhd.

“All the shortlisted participants for the Prai project, including each member of the consortium, would now be required to sign an integrity pact as part of the bidding process,” the EC said in a statement.

Sources said the EC hoped to announce the winner of the bid by October or November with final approval from the Government.

The tender process this round would be for a capacity of 1,000 megawatts (MW) to 1,400 MW, out of the total of 4,500 MW of power capacity that would be up for bidding in stages.

It is interesting to note that among the shortlisted participants for the tender process are all the five independent power producers (IPPs) involved in the first-generation power-purchasing agreements (PPAs) that will be expiring between 2015 and 2017.

The IPPs under the first-generation PPAs are YTL Power; Segari Energy Ventures Sdn Bhd (a subsidiary of Malakoff); Port Dickson Power Sdn Bhd of Sime Darby group; Powertek; and Genting Sanyen. They have a combined capacity of 4,150 MW.

The EC had earlier noted that the first-generation PPAs would not being renegotiated, and the current ongoing competitive tender exercise was meant to replace their capacity.

But EC chairman Tan Sri Dr Ahmad Tajuddin Ali had recently said that the IPPs under the first-generation PPAs could still submit bids for a possible extension of their licences for another 10 years. This, however, would be subject to some conditions, including an agreement by the IPPs to reduce capacity payment for four years from now till the end of their current agreements.

There is an urgent need to bump up power supply by up to 4,500 MW for Peninsular Malaysia to cater to future demand. Power demand in the country is expected to grow at an average of 4% per year over the next five to 10 years.

“It is not surprising that the IPPs under the first-generation PPAs would be shortlisted for the tender process for new licences to power supply capacity. After all, they already have the necessary experience and expertise, and existing capability to cater to the industry's demand,” an industry observer said.

“But we think it is their pricing that would be the main determining factor as to whether they could remain as part of the supply chain in the power sector industry after their existing licences lapse.”

At this juncture, however, 1MDB and Pendekar Power remain as “conditional” participants for the Prai project because of the corporate exercise that the two companies are currently undergoing.

1MDB had earlier announced it would acquire the power assets of Tanjong plc. This would include the latter's wholly-owned unit, Powertek, which was the holding company of Pendekar Power.

The EC explained that the overall condition for the tender process had been limited to only one bid submission by any one group or corporation.

The energy regulator had earlier told StarBiz that it was basically looking for players who could offer the most competitively-priced supply of power to the industry, and this one factor would determine the winning and losing parties.

As for market analysts, the EC's announcement of the shortlisted participants for the tender process was “just the beginning of a game that would get more exciting in the days ahead.”

It remains to be seen whether the companies under their coverage would emerge as winners in the process before they could change their ratings for them.

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