TNB inks deals with three IPPs

Tenaga Nasional Bhd (TNB), the largest electricity utility in the country with more than RM70 billion in assets, has inked deals with three independent power producers (IPP) that paves the way for TNB to secure enough capacity to meet future demands, at a more competitive rate.

TNB, via an announcement on Bursa Malaysia yesterday evening, has signed supplementary power purchase agreements and new power purchase agreements (PPA) with namely Genting Sanyen Power Sdn Bhd, Segari Energy Ventures Sdn Bhd and TNB Pasir Gudang Energy Sdn Bhd (formerly known as Sultan Iskandar Power Station).

These three companies are the successful bidders of Track 2 tender.

The Track 2 is a restricted tender organised by the Energy Commission for the renewal of the operating licenses of the first generation IPP and TNB plants.

The extensions were awarded to the IPPs so that the country enough capacity to meet the growing demand starting 2016 at the lowest energy cost and with minimum completion risks.

TNB said that the new power purchase agreements will provide for the extension periods of 10 years for Genting Sanyen and Segari Energy and five years for TNB Pasir Gudang.

It also added that the supplementary agreements would provide for the reduced rates offered by the successful bidders.

Tan Sri Leo Moggie, TNB chairman, said that the agreements signed was a great milestone for the IPPs involved and also for TNB.

“The selected IPPs will execute supplementary agreements reflecting their reduce capacity rate financial (CRF) offer compared to the figure that is in the current PPAs,” said the chairman in a media statement yesterday.

The reduced rates will be effective from March 1, 2013 until the end of their initial PPA term, which is in 2016 for Genting Sanyen Power and 2017 for both Segari Energy Ventures and TNB Pasir Gudang Energy.

“I hope the execution of these agreements will further enhance and strengthen the relationship and bilateral cooperation between the parties involved and TNB for the benefit of the Rakyat,” Leo added.

So far Tuesday, TNB shares on the local bourse traded as high as RM6.94 (or 1 sen higher) with more than 2.9 million shares changed hands.