Thursday, December 16, 2010

Malaysia's Tenaga signs deals (with Sinohydro) worth over 1 bln rgt for hydro project

Malaysia's Tenaga signs deals worth over 1 bln rgt for hydro project
http://www.reuters.com/article/idUSL3E6NG0P120101216

* Signs three agreements worth 1.05 billion ringgit ($333.3 million)

* Two new hydroelectric dams generating 250 mw to be commissioned in 2015

* Construction to be handled by JV comprising Sinohydro and Loh & Loh

* India's Alstom involved in constructing generating plants

By Min Hun Fong

KUALA LUMPUR, Dec 16 (Reuters) - Malaysia's national power producer Tenaga Nasional has signed three agreements worth over 1 billion Malaysian ringgit ($318.7 million)for its Hulu Terengganu hydroelectric project.

The project, which will involve the construction of two dams and the installation of generating facilities on the east coast of the peninsular, is expected to have a maximum output of 250 megawatts.

An analyst with a local brokerage told Reuters the deal was anticipated by the research community and was largely priced in by the market.

"Tenaga has a cashflow of 3-4 billion ringgit a year and a net gearing of about 45 percent," said the analyst, who cannot be named as she is not authorised to speak to the media. "They can easily take on more debt for this project."

The three agreements comprise an 828.3 million ringgit ($264 million) venture with a unit of Loh & Loh Corp and China's Sinohydro , a 127.6 million ringgit ($40.7) deal with a consortium comprising Alstom Projects India and its Malaysian counterpart, and a third agreement with several engineering firms worth about 90 million ringgit ($28.7 million).

The Loh & Loh-Sinohydro collaboration will construct the two dams and the Alsom consortium would be building the two generating plants.

Tenaga Nasional is Malaysia's state-owned power producer, and solely responsible for the distribution of electricity in the country.

The power company is looking to expand its generating capacities as it is expected to breach the 20 percent reserve capacity by 2015, which is also when the Hulu Terengganu hydroelectric dams are due to be commissioned.

It is also looking at the construction of a second coal-fired plant in the state of Perak, which is located on the west coast of the peninsula.

Tenaga's shares closed down 1.4 percent on Thursday. The announcement was made after the local bourse closed for the day. ($1 = 3.138 Malaysian Ringgit) (Reporting by Min Hun Fong and Saumyadeb Chakrabarty)


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