4 May 2011
KUCHING: Recent news flow on the power tariff negotiations between Sarawak Hidro Sdn Bhd (Sarawak Hidro) and Sarawak Energy Bhd (Sarawak Energy) has been positive – implying that a deal could be on the cards soon.
According to a report, a power purchase agreement (PPA) between both parties would likely be signed in two months.
Both federal and state governments were believed to have reached a pact on tariffs for power off-take from the Bakun damn earlier last week.
It was likely to be between Sarawak Energy’s starting rates of six sen per kilowatt hour (KwH) and seven sen per KwH as requested by Sarawak Hidro, the owner and developer of Bakun dam. By extension, this would place the valuation of the RM7.5 billion Bakun dam to be somewhere between RM6 billion and RM8 billion.
At seven sen per KwH, Sarawak Hidro’s valuation was in line with the findings of a recent study by PriceWaterhouseCoopers – which valued Bakun at between RM8 billion and RM10 billion.
It was also reported last month that Sarawak Energy had proposed to take up a 30 per cent stake in the Bakun project for RM1.3 billion, RM700 million of which would likely be via equity injection and the balance RM650 million coming from shareholders’ loan. By extension, this implied a valuation of RM6 billion based on a Sarawak Energy’s offer of six sen per KwH.
Furthermore, AmResearch Sdn Bhd (AmResearch) gathered the 2,400 megawatt (MW)-Bakun dam was ready to supply its first 300MW of power by July.
“Sarawak Energy has moved quickly to sign PPA term sheets with four companies – Press Metal Bhd (Press Metal), OM Materials, Asia Minerals Ltd and Tokuyama Corp. These first batches of companies are expected to consume a combined 1,300MW for their respective plants, to be located at Samalaju Industrial Park in Bintulu.
“This was quickly followed by an agreement between Gulf International Investment Group Holdings Sdn Bhd and Aluminium Corp of China to set up an US$1.5 billion aluminium smelter in Similajau. The smelter is expected to take up 600MW of power initially based on a production capacity of 370,000 tonnes,” stated AmResearch in its sectoral update report.
The research house’s ground checks indicated that Sarawak Aluminium Smelting Sdn Bhd – a joint-venture between Rio Tinto Alcan and the Cahya Mata Sarawak group – could be a third player to set up an aluminium smelter in Similajau.
“The smelter is expected to consume between 900MW and 1,200MW of power against an annual capacity of up to 720,000 tonnes,” said AmResearch.
The research house continued to favour Press Metal as an early beneficiary of crystallisation of long-term power supply with Sarawak Energy. To be sure, the group is currently the only direct play on the commissioning of Bakun dam.
AmResearch pointed out that Press Metal’s recent capital raising manoeuvres positioned the group to embark on Phase Two of its expansion programme that could potentially triple capacity to 360,000 tonnes by end-2012.
Source: Borneo Post Online
URL: http://www.theborneopost.com/?p=127687
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