Tenaga ... Jun10

It will bid for a RM7 billion (US$2.1 billion) government project to upgrade power plants as the economic recovery boosts electricity demand.

Construction of a new coal-fired plant at the utility’s existing station in Manjung would start in early 2011 and be completed by the end of 2014.

Malaysia’s Energy Commission will soon call for bids to upgrade power plants by 2015 as the electricity reserve margin could fall below 20 per cent if capacity isn’t increased.

Power demand may rise by as much as five per cent a year in the next five years, in step with the government’s target of six per cent annual growth through 2015.

Tenaga may have to compete for the project with MMC Corp, Malaysia’s second-biggest electricity producer, and Jimah Energy Ventures, an independent power producer with a 25-year licence to operate a 1,400-megawatt coal-fired plant near Port Dickson in the southern state of Negri Sembilan.

If Tenaga wins the bid, it may sell bonds in the middle of 2011 to help finance the project. The usual funding structure will be 20 per cent equity and 80 per cent debt, so probably around RM4 billion to RM5 billion kind of debt-raising” would be needed.

The government is planning 52 infrastructure and development projects worth RM63 billion over the next five years (2010-2015), including two coal-fired power plants. The contracts will be put up for open tender.