1MDB Look Set to Win Jimah Project
1Malaysia Development Bhd (1MDB) has fuelled up its chances of securing an estimated RM14 billion power project with the acquisition of the Jimah power plant in Negri Sembilan.
Sources said with Jimah, 1MDB now stands a better chance of securing the contract, coded Project 3B, from the Energy Commission (EC).
The EC had reportedly shortlisted five consortia to tender for the 2,000-megawatt (MW) Project 3B coal-fired power plant to be developed at the respective consortia’s proposed site.
The five are 1MDB, Formis Resources Bhd, Tenaga Nasional Bhd (TNB), Malakoff Corp Bhd and YTL Power International Bhd. All the contenders have either foreign or local partners.
“There are very few participants in the coal-fired power plant segment and 1MDB, via Jimah, now has a good opportunity at 3B,” one of the sources said.
“Jimah has already built a jetty which will enable it to transport coal easily,” the source added.
CIMB Research recently estimated that going by the Janamanjung and Tanjung Bin extension awards in 2010, the total cost for Project 3B may be RM6 million to RM7 million per MW or RM12 billion to RM14 billion.
1MDB is also bidding for Project 3A, involving a 1,000MW coal-fired power plant. But it has been said that TNB is the front runner for this project. In 2011, Jimah lost to Malakoff in building a 1,000MW plant. Last Friday, 1MDB announced a deal to buy a 75 per cent stake in the 1,400MW Jimah power plant for RM1.2 billion. TNB remains a 20 per cent shareholder while the Negri Sembilan royalty holds the remaining five per cent.
“The valuation for Jimah is fair. By 2018, Jimah is expected to see profitability and with a 25-year power purchase agreement in place, its profit track record should remain positive,” another source said. The source noted that with Jimah, 1MBD’s total combined power generation capacity stands at above 3,000MW.
“1MDB is growing its talent pool in the energy sector, particularly with the acquisition of Jimah which has brought about a formidable team of specialists in the energy sector.
“1MDB is clearly growing a viable strong earnings recurring power generation business.”
The source added that 1MDB is also diversifying its energy options from gas to coal to maintain a diversified energy generation portfolio.
The Jimah deal is 1MDB’s third power plant acquisition. It had bought T. Ananda Krishnan’s electricity power generation business for RM8.5 billion in March last year and Genting Bhd’s domestic energy operation for RM2.3 billion last August.
