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Infrastructure & PPPs in Malaysia - Q2 2023 Update

YOG INFRA Q2 2023 insight series

MALAYSIA is set to begin implementation of its ambitious energy transition plan in 2023, with a simultaneous target to reduce cost of renewable energy generation. This entails use of technical interventions (e.g., bio-mehanation) and financial interventions to reduce cost of capital (through sukuk bonds, green investment platform etc.). The country continues to see good interets from international developers for PPP & infrastructure projects.

Read the key developments in Infrastructure and PPPs in Malaysia in our latest insight series.

 

April 2023

OSAKA GAS PLANS JOINT STUDY FOR MALAYSIA METHANATION PROJECT

Osaka Gas partnered with IHI Corporation and PETRONAS Global Technical Solutions, the technical solutions arm of global energy group PETRONAS, to conduct a feasibility study for a biomass-based methanation project in Malaysia. The project aims to establish a new method to produce e-methane to generate hydrogen. It aims to reduce the cost of renewable electricity used in the process. In later phases, the project partners will look at capturing and storing the biogenic carbon dioxide - a byproduct of e-methane production - as well as underground carbon capture and storage. Starting in 2030, Osaka Gas intends to consider importing e-methane to Japan from its overseas production sites, including this project.


SOLARPACK RAISES EUR 59 MN FROM ISLAMIC BONDS IN MALAYSIA

A unit of Solarpack raised MYR 285 Mn (EUR 58.6 Mn, USD 64.3 Mn) from a green Islamic bond issue in Malaysia. The proceeds were used to refinance a bridge loan drawn to fund the construction of its 116 MWp solar plant being operated by the company in the Southeast Asian country.

The notes comprise 38 semi-annual tranches with tenors ranging from 1 year to 19.5 years. Maybank Investment Bank (MIBB) acted as the principal advisor and lead arranger. MIBB and CIMB Investment Bank acted as the joint lead managers. Solarpack aims to execute financial transactions that qualify as green financing for the amount of EUR 1 Bn by the end of 2023.


MAHB AND WCT TO WORK ON RM 1.5 BN SUBANG AIRPORT UPGRADE PROJECT

Malaysia Airports Holdings Bhd (MAHB) and WCT Holdings Bhd have partnered to work on the RM 1.5 Bn (USD 319.5 Mn) project to upgrade the Sultan Abdul Aziz Shah Airport (Subang Airport) in Selangor over a period of three years. Works will be carried out in 2 phases, with phase 1 focusing on Terminal 2 and phase 2 including works on Terminal 3. The upgraded terminals will be able to accommodate around 3 Mn passengers.

The Government of Malaysia approved the Subang Airport Regeneration Plan and MAHB was appointed to oversee redevelopment work. MAHB will develop the business plan, to be submitted to the Ministry of Transport (MOT) for approval before work can start.



May 2023

NEW PHASES OF THE SABAH-SARAWAK LINK ROAD IN THE PIPELINE

The Sabah-Sarawak Link Road (SSLR) Project Phase 2 and 3 is currently in the process of management and price evaluation. Once completed, tenders will be launched for works on the road project. The Government of Malaysia allocated RM 6.5 Bn (USD 1.39 Bn) for key projects in Sabah under the Malaysia Madani Budget, one of which is the SSLR project. The SSLR project will add 425 km of new roads across 14 major towns in Sabah and Sarawak. The entire project will take between 6 and 10 years to complete. Work on Phase 1, between Lawas to Pa Berunut, is already underway.


MALAYSIA TO IMPLEMENT ENERGY TRANSITION PLAN IN PHASES

The Malaysian government will roll out in phases its roadmap for energy transition. The 1st phase by end-June 2023 identifies crucial strategic initiatives and projects, including solar and hydrogen as well as a renewable energy special zone. The government is looking to achieve its targeted renewables capacity of 70% by 2050. The 2nd phase will start in August 2023 covering legislative changes and incentive financing available to expedite the transition process.

The roadmap signifies Malaysia’s determination to drive change by actively investing in renewable growth areas, with an estimated investment of RM 637 Bn (USD 150 Bn) to reshape the regional renewables landscape.



June 2023

CHINA ENERGY PLANS MALAYSIAN FLOATING SOLAR AND HYDROGEN

China Energy Engineering Corporation (CEEC) will look at developing floating solar, power storage and hydrogen energy projects in Malaysia. CEEC is also looking up in smart transport and integrated smart energy. The Chinese company has built more than 10 energy projects in Malaysia, including in Sarawak, Sabah, Kelantan, Selangor, Johor, and Penang provinces. It is also in the midst of construction of the 1.3 GW Baleh hydropower project. Malaysia is targeting to increase the share of renewables to 70% by 2050 from the existing 25% and has approved plans to develop distributed solar systems on the rooftops of government buildings.


MALAYSIA'S KHAZANAH TO ESTABLISH GREEN INVESTMENT PLATFORM

Malaysian state fund Khazanah Nasional (Khazanah) will be setting up a green investment platform . The platform aims to attract domestic and overseas investments, will be mobilised under UEM Group Berhad (“UEM Group”). The platform will look to invest and build businesses in green sectors such as renewable energy & storage, green building technology & energy efficiency, and e-mobility ecosystem.

In line with Khazanah’s Advancing Malaysia strategy and as part of its nation-building and value creation initiatives, the platform is aimed at delivering Khazanah’s societal, strategic, and financial mandates. Khazanah plans for the platform to drive Malaysia’s decarbonisation agenda while also upskilling Malaysians in green sectors over the long term. The platform will also serve to unlock value in Khazanah’s existing portfolio and achieve commercial returns by developing its seed assets through new investments and collaborating with high potential local and international companies.


PLUS TO INSTALL 100 FAST EV CHARGERS ACROSS HIGHWAYS IN MALAYSIA

PLUS Bhd (PLUS) plans to install around 100 DC fast chargers (DCFC) across Malaysia’s 1,130 km highway network by 2025. PLUS has collaborated with Yinson GreenTech (YGT) and Green EV Charge Sdn Bhd (GEV) for the project and the partners will be supported by the Ministry of Public Works (KKR) and the Malaysian Highway Authority (LLM).

YGT will upgrade and install 5 new DCFC chargers at PLUS’ rest stop areas (RSA) in Tapah, Dengkil, Gunung Semanggol, Pagoh and Seremban. The company has already upgraded an AC EV charger at Ayer Keroh Bridge to a DCFC. The 1st fast charging hub in Seremban will feature 8 charging bays, each with a 350 kW capacity, and will be able to fully charge a vehicle in 20 minutes. This move will be key in achieving the Government of Malaysia’s aim of achieving carbon neutrality by 2050.


KUALA LUMPUR INTERNATIONAL AIRPORT UPGRADES TO START IN 2026

The Ministry of Transport (MoT) of Malaysia plans to commence works to upgrade the Kuala Lumpur International Airport (KLIA) in 2026. Works will be carried out in 2 phases to increase capacity to 140 Mn passengers per year and cargo capacity to 2.5 Mn tonnes per year. The airport is expected to reach 90 % capacity by 2026.

Meanwhile, Malaysia Airports Holdings Bhd (MAHB) is upgrading the Track Transit System (TTS) and Baggage Handling System (BHS) at KLIA. Work is expected to be completed by the end of 2025 and will improve passenger handling capacity at the airport.

 

List of key transactions - Malaysia Q2 2023

Source: Inframation, YOG INFRA analysis

 

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