Posted on 12 December 2007

 

Source: The Star, December 11, 2007
Melewar Industrial Group Bhd (MIG) expects its inaugural power plant project in Thailand to generate annual revenue of about RM330mil when the first phase commences operation in 2010, said group chief executive officer Tunku Datuk Yaacob Tunku Abdullah. 

Its wholly-owned subsidiary Mperial Power Ltd owns 70% of Siam Power Generation Public Co Ltd (Sipco), which has been given the concession licence to build a 450-megawatt (MW) power plant in Ruyong, Thailand. 

The first phase involves 160MW, of which 90MW would be sold to the Electricity Generating Authority of Thailand (EGAT) and 70MW to G Steel Public Co Ltd for 25 years. 

Mperial chief executive officer Yeo Weng Chew said the selling price was about 7 US cents per kilowatt hour. 

Group chief executive officer Nikmat Abdullah said discussions for the second phase of another 90MW were underway and expected these to be concluded by the first half of next year. 

The final phase involving 200MW would depend on the off take of the first two phases, he said after the signing ceremony yesterday.

Sipco awarded the engineering, procurement and construction contract worth US$150mil to a consortium comprising South Korea's Hyundai Engineering Co Ltd and Japan's Sojitz Corp. 

The operations and maintenance part, valued at some US$100mil, was given to GE Energy for a period of 25 years. The Sipco power plant is also sourcing its gas turbines from GE.

Sipco has also signed a 25-year contract from Thailand’s top energy firm, PTT Pcl, for the supply of gas for US$60mil a year. The gas feedstock comprises 60% of costs. 

Nikmat said the volatility of gas prices was unlikely to affect Sipco, given that a pass-on mechanism was stipulated in the contracts.

Yaacob said the project would be funded by 70% bank borrowings and 30% equity. Negotiations with financial institutions are ongoing. 

He said following the financial close by the first half of next year, Melewar intended to reduce its shareholding in Sipco. 

“About 40% will be a comfortable shareholding level, especially when we have international partners,” Yaacob said, adding that Sojitz was among the four parties that had shown interest. 

The diversification into owning power-generating assets would provide attractive income to Melewar, he said, adding that risks were minimised, given the predictability of cost and returns. 

Nikmat said the group was also looking at other deals in Vietnam, the Philippines, China and Indonesia.

 

 

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