KUALA LUMPUR (March 26): Independent power producer (IPP) Malakoff Corp Bhd is exploring combined-cycle gas turbine (CCGT) and solar photovoltaic (PV) plants in its Tanjung Bin site in Johor, to cater for electricity exports.
The group, which has 21% of generation capacity in Peninsular Malaysia, is “actively pursuing” a new CCGT project, it said in its 2023 annual report on Tuesday.
Malakoff has seen generation capacity declining in recent years following the expiry of power purchase agreements (PPAs), the latest being a 21-year PPA for the 640-megawatt (MW) GB3 gas-fired plant in Lumut, Perak in 2022.
Export opportunities abound led by Singapore, which is seeking to import up to 1,200MW of electricity by end-2027. Malaysia has expressed intention to participate, and lifted its renewable energy (RE) export ban to Singapore last year, although details of the mechanism have yet to be ironed out.
Malakoff’s effective thermal power generation capacity stood at 5,342MW, with RE capacity of 153MW, its annual report showed.
In Kukup, Johor, where Jalan Tanjung Bin is located, Malakoff owns 90% in the 2,100MW coal-fired Tanjung Bin power plant in Johor, the PPA of which expires in 2031. It also wholly owns the 1,000MW coal-fired Tanjung Bin Energy power plant that is contracted to operate until 2041.
Aside from looking for new CCGT capacity, Malakoff said it will continue to invest in expanding the proportion of its biomass co-fired project with coal.
“Presently, the co-firing rate is at 0.5% with encouraging initial results. From here, we will gradually increase this to 2% and execute progressively to safeguard the integrity of our equipment and machines,” it said.
On lookout for M&A
Aside from bidding for new RE projects, Malakoff said it is considering potential acquisitions in operational greenfield ventures “particularly large scale solar (LSS) projects and exploring opportunities in waste management and environmental solutions”.
This came as it acknowledged that some potential sellers, including LSS players, are hesitant to let go of their assets despite lucrative opportunities for monetisation and current market stability.
The group said it aims to leverage its established partnerships and focus on countries it is familiar with such as Malaysia, Saudi Arabia, Bahrain and Oman.
“By collaborating with local and international partners, these alliances will not only enhance our expertise and facilitate technology transfer but also create investment opportunities in Malaysia,” it said.
“We will take a prudent approach to M&A (merger and acquisition) activities, ensuring a balance between aggressiveness and selectivity. Armed with substantial reserves and a robust war chest, we have positioned ourselves to weather potential downturns, allowing us to acquire assets at favourable rates from sellers,” it said.
Earlier this year, Malakoff managing director and chief executive officer Anwar Syahrin Abdul Ajib told The Edge in an exclusive interview that the group has set aside RM500 million to RM1 billion for M&A.
Last month, Malakoff announced that it incurred a net loss of RM884.36 million for the financial year ended Dec 31, 2023 (FY2023) — the group's first annual net loss since its listing in 2015 — versus a net profit of RM255.03 million in FY2022. Revenue fell 12.4% to RM9.07 billion from RM10.36 billion a year earlier.
The group also posted a net loss of RM357.1 million for its fourth quarter ended Dec 31, 2023 (4QFY2023) against a net profit of RM41.9 million in 4QFY2022, while revenue fell 23.89% to RM2.26 billion from RM2.97 billion a year earlier.
It attributed the losses to substantial negative fuel margin at its Tanjung Bin Power and Tanjung Bin Energy coal plants, lower contribution from the GB3 gas plant following the expiry of its PPA, as well a substantial share of loss from its 40%-owned Al-Hidd independent water and power producer associate in Bahrain.
At 4pm on Tuesday, shares in Malakoff were one sen or 1.59% higher at 64 sen, valuing the group at RM3.17 billion.