KUALA LUMPUR: Sime Darby Bhd and Tenaga Nasional Bhd (TNB) will form a joint venture company to develop renewable energy using biogas converted from palm oil mill effluent (POME).

Sime Darby's wholly owned subsidiary, Sime Darby Plantation Sdn Bhd (SDP), will collaborate with TNB Energy Services Sdn Bhd, a wholly owned unit of TNB, in a proposed 51:49 joint venture (JV) to undertake the project.

The JV company, Sime Darby TNBES Renewable Energy Sdn Bhd, will operate and maintain the Flemington and Hadapan power plants that will generate power utilising methane gas recovered from POME from SDP's two oil palm plantations, Flemington and Hadapan estates.

The JV company, which will have an authorised share capital of RM8 million, will also engage in the sale of the power generated by the two plants to distribution licencee(s) licensed under the feed-in-tariff scheme.

In a statement to Bursa Malaysia yesterday, Sime Darby said SDP will finance its portion of the investment in the JV company through internally generated funds."To support the current shortage of gas supply and aging power plants, it is the intention of both SDP and TNB Energy to develop renewable energy plants using biogas converted from palm oil mill effluent with the objective of selling the electricity generated to the national grid,” it said.

As at June 2012, SDP had 129 estates and 36 palm oil mills in Malaysia, It also operates 70 estates and 23 palm oil mills in Indonesia. Sime Darby has been using empty fruit bunch (EFB) and POME as organic fertilisers or manure in its plantations.

In a separate filing with Bursa, Sime Darby said its two major shareholders — Permodalan Nasional Bhd (PNB) and the Employees Provident Fund (EPF) — have increased their stakes in the conglomerate.

PNB's Skim Amanah Saham Bumiputera (ASB) increased its stake to 35.7% with the acquisition of 1.3 million shares on June 19 and 20. Prior to the acquisition, ASB had a 35.68% stake in Sime Darby.

PNB had also increased its direct stake to 10.55% from 10.54% previously when it acquired just under a million shares on June 20 and 21. The EPF, meanwhile, nudged up its stake to 12.62% from 12.61% previously.

On Monday, Sime Darby announced the appointment of former Johor menteri besar Datuk Abdul Ghani Othman as its  new chairman and director effective July 1, taking over from interim chairman Tan Sri Shamsudin Osman. — by Shalini Kumar

This article first appeared in The Edge Financial Daily, on June 26, 2013.