This article first appeared in The Edge Malaysia Weekly on November 27, 2023 - December 3, 2023

WORLDWIDE Holdings Bhd, the sanitary landfill operator owned by Perbadanan Kemajuan Negeri Selangor (PKNS), is building up its portfolio of waste-to-energy (WTE) plants, with its latest win being the Bukit Payong WTE project in Batu Pahat, Johor.

According to a Worldwide spokesperson, the group now owns three WTE projects, including the one in Batu Pahat. Its first project is the Jeram WTE plant, which is being developed together with Shanghai Electric Power Generation (M) Sdn Bhd in Jeram, Kuala Selangor, while its second is located in Tanjung Dua Belas, Banting, Selangor.

“The Jeram WTE project is currently being financed through project financing with a combination of equity and debt.

“Being one of the first WTE plants in Malaysia, the Jeram WTE project financing has undergone extensive due diligence by independent professional advisers and will set a precedent in the market for WTE financing,” says Worldwide in a written response to The Edge’s questions.

The Jeram WTE project is expected to cost about RM1 billion and will be developed over two phases. Meanwhile, in 2018, news reports stated that the Tanjung Dua Belas WTE project was estimated to cost around RM500 million.

“Currently, we have started the pre-development works for the Tanjung Dua Belas (TG12) WTE plant and the procurement process is ongoing. Hence, we are not able to expose the cost,” the group states.

Worldwide will explore various debt project financing instruments, such as sukuk and syndicated loans, to determine the best limited recourse financing plan for the project, it says.

Worldwide’s success in securing the Bukit Payong WTE project is a setback to Cypark Resources Bhd, which had been eyeing the project as its second WTE project after the Ladang Tanah Merah WTE project in Port Dickson, Negeri Sembilan.

Cypark announced in March 2021 that it had entered into a cooperation agreement with Permodalan Darul Ta’zim Sdn Bhd (PDT) to participate in the WTE project in Johor. PDT is a Johor state investment holding company.

A request for proposal for the Bukit Payong WTE project was called in August 2020.

For Worldwide, with the multibillion ringgit investments needed to finance the three WTE projects, it will have to consider corporate exercises to raise funds for them.

According to the rumour mill, Worldwide will list its renewable energy (RE) and environment business in the near future to fund the projects. However, the company states that no corporate exercises have been planned for the near term.

The funding of WTE projects is challenging, according to industry insiders. This is because of the high capital intensity of the project as well as the feed-in tariff (FiT) regime that have made WTE projects less attractive for banks to lend to compared with conventional power plants.

“The last quoted FiT won by SIPP Power Sdn Bhd was 37.5 sen per kW. But, Worldwide somehow gets only 42 sen per kW for its Jeram WTE plant. The difference is only four sen to five sen per kW. Are you really promoting renewable?” asks an industry insider.

“Look at Thailand, the rate difference there is 10 sen per kW — that’s how you promote renewable energy. If the difference is just four sen to five sen per kW, we might as well invest in conventional power plants like SIPP,” he says.

It has to be noted that the government is not looking at WTE plants as an RE play, but rather as a method to better manage domestic waste. In addition to the FiT from the power generated, a WTE operator is also paid a tipping fee for the waste sent to its facilities.

For Selangor, the tipping fee is about RM55 per tonne and paid by the municipal councils from where the domestic waste comes from. However, another industry insider revealed that Worldwide is getting a tipping fee of RM77 per tonne for the Bukit Payong WTE plant .

Worldwide did not provide any information on its FiT rate and tipping fees for the purpose of this story. It is understood that Worldwide has not achieved financial close for both the Tanjung Dua Belas and Bukit Payong WTE projects.

Nevertheless, it reveals its aspiration to be a leading player in RE.

“RE is an emerging sector and Worldwide is actively exploring opportunities that have high growth potential. We aspire to be a leading player in RE, especially in championing the WTE business at the national level,” it tells The Edge.

Selangor seems to be aggressively pursuing WTE projects, considering that the state has the biggest population in Malaysia. Another state-owned entity that is embarking on a WTE project in Selangor is KDEB Waste Management Sdn Bhd, a subsidiary of Menteri Besar Selangor Inc (MBI).

KDEB Waste Management is partnering with YTL Power International Bhd to develop a green energy park in Rawang, Selangor, called the Sultan Idris Shah (SIS) Green Energy Park, at an expected cost of around RM4.5 billion.

The SIS Green Energy Park will be developed over four phases of 10 years. The first phase will see the development of the WTE plant, which has the capacity to process 2,400 tonnes of municipal waste per day as well as generate 58mw of electricity.

In Phase 2, the first WTE plant will be upgraded and expanded to process up to 100 tonnes of scheduled waste per day and generate 4.5mw of electricity, Datuk Ramli Mohd Tahir, managing director of KDEB Waste Management, told The Edge at the company’s headquarters in Shah Alam.

In Phase 3, the second WTE plant with the capacity to process 1,200 tonnes of municipal waste per day and generate 23mw of electricity will be developed. This will be followed by a floating solar power plant with a capacity to generate 45mw of electricity.

“So we foresee this [green energy park] to be the best and fastest and [have] the most efficient technology to deal with 2,400 tonnes of waste per day,” says Ramli.

Together with Worldwide’s investment in the Jeram WTE plant, the current investment in Selangor’s WTE projects amount to RM5.5 billion, excluding the Tanjung Dua Belas WTE plant, for which costs have yet to be finalised by Worldwide.

Selangor contributes about 29% of the daily national waste generation, according to Ramli, and this does not include the waste coming from Kuala Lumpur and Putrajaya that are also dumped in landfills in the state.

This has led to socioeconomic issues, as land that could have been used more efficiently for the growth of the state and the enjoyment of its people is currently being used as dumping grounds for waste.

“Now, we are collecting close to 7,000 tonnes of domestic waste per day and also 3,000 tonnes of public cleansing and bulky waste per day. The national rate is about 34,000 to 35,000 tonnes per day. [Selangor is] the highest generator of waste in the country,” says Ramli.

Together with waste coming from Kuala Lumpur and Putrajaya, Selangor receives about 13,000 tonnes of waste per day, he says.

“For the past 10 to 15 years, there is not even a single year that has shown a decrease in waste generation. Every year, there is an increase of about 2% in the population in Selangor, but an almost 6% increase in waste generation.

“That is why the Selangor government had to think of the best way to manage the waste that is more efficient, economical and advanced,” he says. 

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