Wednesday, October 30, 2013

YTL eyes water and power projects in Johor?

YTL eyes water and power projects in Johor?

PETALING JAYA: Conglomerate YTL Group is actively pursuing infrastructure assets in Johor which may include water treatment and power plants, sources said.

It is understood that among the assets YTL is eyeing is Ranhill Energy and Resources Bhd’s water treatment plants in the state. YTL and Ranhill could not be reached for comments.

Sources said YTL had already started initial discussions to secure large infrastructure projects in Johor.

Ranhill has an exclusive licence to supply source-to-tap water to end-customers in Johor. According to reports, the current licence is valid till 2014 and renewable every three years.

Johor is the country’s second most populous state with about 3.4 million people as at 2012. It is estimated that water consumption in the state would grow by a compounded annual growth rate of close to 7% in the next seven years, underpinned by heavy investment in the property and oil and gas sectors.

Besides its water assets, Ranhill also has a focus on energy and the two sectors had formed the basis for the company’s planned initial public offering for July 31 before it was withdrawn.

To recap, Ranhill’s listing hit a snag after Petroliam Nasional Bhd suspended the licence of its affiliate Perunding Ranhill Worley Sdn Bhd. On July 26, the company announced that it was not proceeding with the listing despite news the licence has been reinstated, albeit for upstream activities.

As for the power sector, YTL is said to be eyeing new assets in Johor.

Its listed utilities arm, YTL Power International Bhd, was one of five companies shortlisted to tender for the Energy Commission’s Project 3B, which comprises a new green field 2,000-MW coal-fired power plant.

The plant, to be built at the respective bidder’s proposed site, is targeted to start by 2019 and may require a capital commitment of more than RM12bil, said analysts.

It is reported that YTL Power has proposed to build a plant in Tanjung Tohor, Johor. The other shortlisted bidders are 1 Malaysia Development Bhd, Formis Resources Bhd, Tenaga Nasional Bhd and Malakoff Bhd.

According to news reports, the closing date for the bid was Sept 30.

An analyst said that with YTL’s power purchase agreement on the Paka and Pasir Gudang power plants set to expire in 2017, the project was an opportunity to potentially replenish its independent power producer (IPP) earnings in the country. But he added that YTL Power would have to put in a competitive bid to bag the project.

YTL Power, the country’s first IPP, is also facing thinning margins from its Singapore unit Power Seraya Ltd due to greater pricing competition. YTL Power also has a 20% stake in PT Jawa Power, the second largest IPP in Indonesia, and a 33.5% stake in Australia’s ElectraNet Pty Ltd, which owns and operates the power transmission grid for South Australia.

In the water business, YTL Power’s main asset is Wessex Water Ltd, a utility concession in the United Kingdom that it bought in 2002.

It is no secret that YTL is on the lookout to acquire concession-type assets. YTL group managing director Tan Sri Francis Yeoh was quoted as saying at the recent Invest Malaysia 2013 forum that the group “had RM14bil in its coffers for years, but we haven’t made any new investment. We’re just waiting for the right time.”

YTL has diversified interests in utilities, construction, property development, hotels and resorts, and technology, among others. Earlier this year, the group, together with partner Malaysia Airports Holdings Bhd, failed to win the £1.2bil (RM5.89bil) bid it had made for London’s Stansted Airport.

Publish date:30/10/13

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