TNB Acquires70% Stake in Jimah East Power Sdn. Bhd for RM46.98 million


Tenaga Nasional Berhad (“TNB”) has signed a Share Sale and Purchase Agreement (“SSPA”) for the acquisition of a 70% equity interest in Jimah East Power Sdn Bhd (“JEP”) for a total consideration of RM46.98 million. 

The SSPA was signed with 1Malaysia Development Berhad (“1MDB”). TNB accepted the Energy Commission’s Letter of Award (“LoA”) to acquire 1MDB’s equity interest in JEP.  JEP is the special purpose vehicle company incorporated by 1MDB and Mitsui & Co. Ltd (“Mitsui”) to execute the financing agreements for the development of 2 X 1000 MW coal-fired power plants in Jimah, Negeri Sembilan (“Project 3B”).

Mitsui of Japan will continue to own the remaining 30% in JEP, and upon completion of the acquisition, JEP will become a subsidiary of TNB. 

Project 3B will see the construction of two green field power plants adjacent to the Jimah Energy Ventures operations in Port Dickson, Negeri Sembilan. It is a cornerstone of Malaysia’s future energy development plans and is located at a strategic site, which is crucial to the security of power supply in Peninsula Malaysia.

TNB’s President and Chief Executive Officer, Datuk Seri Ir. Azman Mohd, stated: “Project 3B is a strong fit for TNB, and we have the experience and skills to ensure its success. Based on our financial analysis and detailed due diligence, the acquisition makes clear commercial sense, will have a positive impact on TNB’s earnings, and will add long-term value to TNB.”

“We are pleased to be able to work closely with Mitsui as our strategic equity partner, and look forward to strengthening our business ties with such a leading global power player,”Datuk Seri Ir. Azman Mohd added.

Earnings Potential

The acquisition of JEP will have a positive impact on the earnings of TNB over the life of Project 3B and will generate returns over and above TNB’s hurdle rate.

Under the LoA, the Energy Commission has offered TNB an increased levelised tariff of not more than 26.67 sen per kWh. This tariff is higher than the one agreed under the previous award to 1MDB-Mitsui, and is justified to offset the expected increase in Project 3B construction costs and the decline in the value of the Malaysian Ringgit on international financial markets.

Estimated project costs are approximately RM11.7 billion and will be financed through a combination of project finance and equity, which is normal for funding of any major infrastructure project. Any debt raised will not have an adverse impact on TNB’s credit profile and consolidated gearing will remain within appropriate levels.

Project 3B will add another high tech, ultra-supercritical coal plant to TNB’s generation portfolio, expanding its operational portfolio of high value generation assets to a total of four ultra-supercritical coal plants. This will strengthen TNB’s domestic and international generation capacity and operational track record.

Project 3B’s two power plants are expected to commence operations by no later than 15 June 2019 and 15 December 2019, respectively. 

The acquisition consideration of RM46.98 million was based on detailed due diligence conducted by TNB and an independent audit firm, and includes some portions of the necessary development costs incurred in the project to date. The cost of investment by 1MDB was RM83.68 million as of 5 June 2015.

Datuk Seri Ir. Azman Mohd stated: “TNB’s view of any business opportunity is simple: it must make strong commercial sense, be assessed based on the highest corporate governance standards and maximise value for TNB shareholders. Taking over the construction of Project 3B meets all these criteria, while also ensuring the reliability and security of Malaysia’s long-term energy needs.”

Untuk ketahui lebih lanjut: File