MRCB ...dated June 2008

What’s Up?

MRCB and a few partners are understood to be in the initial stage of planning the development of a hydropower plant in Ranau, Sabah, centered on the Liwagu River.

Sources say MRCB’s partners are closely affiliated to political bigwigs in that state, which could help iron out the difficulties faced by the company.

The cost of the construction has not been ascertained yet but the construction could easily come up to RM2 billion. This would not include the electro-mechanical expenses.

MRCB is not known to be involved in the construction of hydroelectric dams. But it is well known as a player in the installation of power transmission lines.

Even top officials as Tenaga or its Sabah Electricity Sdn Bhd unit are said to be in the dark as the plan is still in its infancy.

It is understood that the plans to build the hydropower plant at the Liwagu River is not entirely new and had been mooted in the mid 1990s.In April 2008, Sabah Chief Minister said the state was looking at reviving the Liwagu project but added that the capacity being considered was only about 100MW. The project had been shelved with the Bakun Dam coming onstream, but was mulled with the cancellation of the coal fired power plant in Silam.

The Bakun Dam being built in Sarawak was supposed to supply Sabah with electricity via a grid. But the transmission cost was too high and Sabah was told to build its own power plants.

In April 2008, the Sabah government cancelled the proposed construction of a Rm1.3 billion 300MW coal power plant in Lahad Datu. Now with the cancellation of the project, the people of Sabah will have to face the inevitability of a power crisis situation. Currently, the East Coast of Sabah is served by ageing and polluting diesel powered plants, which are hopeless unreliable.


A Positive Impact On MRCB …

Lately, MRCB has been trading languishing due to uncertainty over the outlook for the company.

Since PKR took the helm of the Penang government from BN, several contracts once considered to be in the bag for MRcb, such as the Penang monorail job and the Penang Outer Ring Road, have cecome dicey propositions.

Thus, if this power plant project takes off, the impact will be positive for MRCB. At present, most of MRCB’s revenue, about 53% is derived from its property development business. Engineering and construction accounted for about a third of the company’s revenue for 1Q2008.