Myanmar power sector gearing up for coal project with the Mudajaya Group

Power plant and highway construction specialist Mudajaya Group Bhd will start developing phase one of its US$750 million (RM2.3 billion) coal-fired power plant project in Myanmar in the second half of next year.

It is understood that the special purpose vehicle (SPV) set up by Mudajaya and IJM Corp Bhd co-founder Datuk Koon Yew Yin will build the plant over several phases.

Phase one will supply up to 500 megawatts (MW) of electricity to the Mandalay region, sources said.

“The Myanmar power sector has an open market policy and the government has no limit as to how big the plant can be built. Depending on fuel supply and use, the plant could increase in size,” a source said.

Mudajaya has a 70 per cent stake in the SPV while Koon holds the rest. Both parties last year inked a memorandum of understanding with the Mandalay government to set up two independent power plants in the Mandalay region and other suitable areas.

The first is a coal-fired plant and the second will be a solar-powered plant.

“For now, the focus is to build the coal-fired plant to meet the urgent power requirement. The feasibility study on the project started earlier this month and will be completed within 12 months.

“After the study is completed, the SPV will work on getting the power purchase agreement signed and the financial closure. The plant will be built in phases because of the market risk there,” the source said.

Another source said Mudajaya is working out a financial structure for the project.

For the nine months ended September 30 2012, Mudajaya’s profits rose to RM189.9 million from RM164.5 million a year earlier. Its revenue increased by 47.5 per cent year-on-year to RM1.35 billion, compared with RM916.4 million previously.

Mudajaya’s balance sheet remained healthy with a net cash position of RM419.5 million, shareholders funds of RM1.09 billion and net asset per share at RM2.

The improved performance was driven by its construction division on the back of higher recognition of revenue and profits on work done.

Mudajaya is now bidding for projects worth more than RM5 billion in Malaysia.

Its construction order book as at September 30 2012 stood at RM2.8 billion
.