TNB Awards EPC Contract For Lahad Datu Power Plant To China National Electric Equipment Corporation

22/02/2008

- First EPC to be awarded through open bidding and first contract with Chinese party - Coal plant to employ latest clean-coal technologies and will meet World Bank standards to ensure coexistence with environment Tenaga Nasional Berhad (TNB) through its new associate Lahad Datu Energy Sendirian Berhad (LDE) signed an Engineering Procurement and Construction (EPC) Agreement with China National Electric Equipment Corporation (CNEEC) at the Le Meridien Hotel, Kuala Lumpur, on Wednesday, 20 February 2008. Under the agreement, the CNEEC will be contracted to engineer, procure and construct a 300MW coal-fired power plant in Silam, Lahad Datu. The power plant is an essential component for Sabah electricity supply system and it aims to provide reliable and sustainable power supply to Sabah. The power plant is also an important facility to be built to cater for the demand of electricity in the state especially with the launching of the Sabah Development Corridor (SDC). The decision to develop the power plant was made after a detailed study on Sabah electricity demand requirement by Sabah Electricity Sdn Bhd (SESB), the state electrical utility company. SESB is an 80 per cent subsidiary of TNB. The Lahad Datu power plant was the first one in the country which was awarded through an open bidding. The bidding was successful won by LDE, which 80 per cent owned by Lahad Datu Holdings and Yayasan Sabah (20 per cent). Lahad Datu Holdings is a company formed by TNB (51 per cent), Eden-Nova Sdn Bhd (35 per cent) and Maser (M) Sdn Bhd (14 per cent). The construction for the 300MW plant will start soon after a Detailed Environmental Impact Assessment has been approved by the authorities. The plant is due to be completed by the end of 2010. In his welcoming speech at the agreement signing ceremony, Tan Sri Leo Moggie, Chairman of TNB said, “To ensure successful implementation of this project, both LDE and CNEEC will work together so that the ultimate objective of supplying sustainable and reliable power to the people of Sabah is achieved.” He added that he was confident that agreement will be the beginning of a successful collaboration not only between LDE and CNEEC, but also an opportunity for both China and Malaysia to embark on many similar working projects together in the power industry. The location of Lahad Datu was had been carefully selected after long research and study. The area of Silam was finally selected for its proximity to the recently completed Sabah East-West grid. The location was the most ideal because it provides the efficient power transmission option at the most economical choice. Tan Sri Leo also emphasised that LDE was fully committed to ensuring that the plant’s impact to the environment is minimised. According to him, ‘To ensure that all the measures to be taken will indeed comply with the Department’s requirements, we have prepared a comprehensive Detailed Environmental Impact Assessment (DEIA) report to ensure compliance to the Department’s Terms of Reference. We would also like to assure everyone that construction work will not be allowed to start at the site without the Department’s approval of the DEIA report.’ The plant, which will be built on land parcels called Darvel Bay, Silam, would employ state-of-the-art clean coal technologies designed for purposes of capturing pollutants before they are released. These practices drastically reduced emissions of particulates, sulphur oxide gases and nitrogen oxide gases into the atmosphere. LDE will also employ all best practices with regard to the treatment of wastewater and the storage of ash collected from the power plant. Tan Sri Leo Moggie mentioned that it was in TNB and LDE’s agenda to meet the very stringent environmental requirements by the Department of Environment, and that the company had also voluntary plans to implement World Bank standards in the building of the plant. Signing on behalf of LDE is its chairman Y.Bhg. Dato’ Sri Che Khalib Mohamad Noh who is also TNB President/Chief Executive Officer. CNEEC was represented by its President, Mr Zhao Ruolin. The event witnessed by TNB Chairman, Y.Bhg. Tan Sri Leo Moggie, LDE Director, Y.Bhg. Dato’ Abdul Razak Majid and CNEEC General Manager, Mr Weng Zhiming. Also present to witnesses the ceremony were Ambassador of The People’s Republic of China, His Excellency Mr Cheng Yonghua, representatives from LDE, CNEEC, and TNB.