Infrastructure & PPPs in Malaysia - Q3 2021 Update
YOG INFRA Q3 2021 insight series
MALAYSIA is an active market with interesting & evolving financing sources - project finance, corporate debt, sukuk bonds and international investments across infrastructure sectors. We see these financing trends setting a benchmark for other ASEAN countries so as to meet the financing gap for infrastructure.
Read the key developments in Infrastructure and PPPs in Malaysia in our latest insight series
MALAYSIA CONSIDERS PFI PROPOSALS FOR SUBWAY LINE
Malaysia’s Mass Rapid Transit Corporation (MRT Corp) has received several private finance initiative (PFI) proposals to develop a new subway line. The company took in more than 40 submissions for the MRT 3 Circle Line project from domestic companies following request for information.
The 50km line will cost an estimated MYR 20Bn (USD 4.7Bn) to MYR 30bn. Private investors could finance up to 30% of the project, which will be located in Kuala Lumpur and neighboring cities. After a change of government in 2018, Malaysia announced a review of several transport infrastructure projects, including the MRT 3 Circle Line and a MYR 110bn high-speed railway connection between Singapore and Kuala Lumpur.
MALAYSIA ENERGY TRANSSHIPMENT PROJECT SET TO RAISE DEBT
A project company backed by Straits Inter Logistics plans to raise debt for a new ship-to-ship energy transshipment hub in a Malaysian port. The project will have a debt-to-equity ratio of 0.5. The cost of the first phase is MYR 15m (USD 3.5 Mn),
Straits Inter-backed Victoria STS (Labuan) will develop the project, located in the port of Victoria, in Malaysia’s federal territory of Labuan. The island of Labuan is located off the coast of Borneo, near Brunei. The total area of the facility will be 3,309ha.
The transshipment hub will be compatible with LNG, LPG, Liquefied Ethylene Gas and bulk petroleum and oil cargo. Straits inter owns 60% of Fajar Maritime and Logistics, which in turn holds 70% of Victoria STS. Local investor Patrick Tiong owns the remaining share of Victoria STS.
The initial phase of the project is set to start commercial operations in the fourth quarter of 2021.
MALAYSIA AWARDS 450 MW OF SOLAR CAPACITY
Malaysian state-owned utility Tenaga Nasional has awarded 450 MW capacity to nine solar power projects. Each 50 MW project will be backed by a 21-year power purchase agreement.
The tender winners are:
1. Asiabina Properties.
2. Classic Solar Farm.
4. JAKS Solar Power.
5. Perbadanan Kemajuan Negeri Pahang & Kumpulan Powernet - a subsidiary of KPower.
6. Ragawang Corporation.
7. Ranhill Utilities.
8. TNB Renewables; and
9. Uzma Enviroenergy, a subsidiary of Uzma Kuala Muda.
The projects are slated to begin commercial operations between March and December 2023. In 2020, Malaysia launched a tender to develop up to 1 GW of solar projects, restricting the auction to local bidders. The Energy Commission of Malaysia in May 2021 shortlisted 10 firms to develop projects of between 30 MW and 50 MW.
MALAYSIA'S YINSON SIGNS ROOFTOP SOLAR PARTNERSHIP WITH LOCAL DEVELOPER
Malaysian energy solutions company Yinson Holdings has signed a partnership with Plus Xnergy to build rooftop solar power projects. The companies, which will focus on commercial and industrial (C&I) customers, will aim to build a portfolio of up to 250 MW until year 2025. The projects can be in Malaysia or overseas.
The two companies are seeking to meet growing demand for clean energy solutions in Malaysia. Kuala Lumpur-listed Yinson started with businesses in transport and the oil and gas industry, offering services related to floating, production, storage, and offloading vessel (FPSO) and mobile offshore production units.
MALAYSIA'S SOLARVEST SIGNS 50 MW SOLAR OFFTAKE DEAL
Malaysian renewable energy company Solarvest Holdings has signed a 50 MW power purchase agreement (PPA) with national utility Tenaga Nasional Bhd (TNB). The PPA includes three solar power developments that will be located in the states of Perak and Selangor. The tenure of the PPA will be 21 years from the start of commercial operations.
The developments comprise of a 25 MW and a 13 MW solar project in Manjung, Perak, and a 13 MW project in Kuala Selangor. They are scheduled to start construction in 2021 and begin commercial operations between 2022 and 2023.
EVERBRIGHT SEEKS MALAYSIA ENVIRONMENT AND RENEWABLES PROJECTS
A unit of Chinese state-run conglomerate Everbright Group is interested in developing projects in the environment and renewables sectors in Malaysia. Everbright Environment is looking particularly at environment protection, energy conservation, clean energy, and other green projects in the Southeast Asian country.
The plan is part of Everbright’s Belt and Road push as the company - which already has projects in Germany, Poland, and Vietnam - continues to explore overseas opportunities, especially in Southeast Asia.
SHELL TO INVEST IN RENEWABLES-POWERED MALAYSIA GAS PROJECT
Energy company Shell has agreed to invest in the Timi gas project off the coast of Malaysia. The company and its partners - state-owned Petronas as well as Brunei Energy Exploration - will develop the project, which is likely to produce up to 50,000 barrels of oil equivalent per day.
The project will include an unmanned wellhead platform, which will be 60% lighter than the conventional version. It will be powered by a solar-wind hybrid energy system, making Timi Shell's first renewables-powered gas project in Malaysia. The project is expected to commence operation in 2021.
The gas produced from the field will be sent to Shell's existing F23 production hub near Sarawak through an 80km pipeline.
MALAYSIAN COMPANY FINANCES PERAK BUS TERMINAL WITH SUKUK
Malaysian transport terminal developer and operator Perak Transit Bhd has issued MYR 100Mn (USD 24Mn) Islamic notes - sukuk - to finance the development of the Bidor Sentral bus terminal in Perak state. UOB Malaysia and AmBank Group were the joint lead managers for the medium-term sukuk issuance.
The latest debt issue is a second tranche of the 15-year, MYR 500m sukuk programme launched by Perak Transit in late 2019 to fund working capital, capital expenditure and project development. The company had allocated MYR 200m from the programme for the Bidor transportation terminal project.
Bidor Sentral will be located in the Bidor area of Batang Padang district of Perak and will be a southern transport hub for the state. It was scheduled to start construction in Q2 and be finished by 2023, but construction has been delayed by movement control orders prompted by the COVID-19.
TENAGA TARGETS HYDROPOWER PLANT FINANCIAL CLOSE NEXT YEAR
Malaysian state-owned utility Tenaga Nasional aims to reach financial close before the second half of 2022 on a MYR 5Bn (USD 1.2Bn) hydropower project in the state of Kelantan. The government has set the financial closing date no later than 24 June 2022.The project will have a 70:30 debt-to-equity ratio.
The company has been awarded a letter of notification from the Ministry of Energy and Natural Resources to develop the project. The 300 MW plant will take five years to develop and is set to start commercial operations in June 2027.
Malaysia plans to increase its renewables capacity to 18 GW from the current 8 GW, the Minister of Energy and Natural Resources. The Kelantan hydropower project will also be used as a source of irrigation water and raw water supply for Kelantan state. It will sign a 30-year power purchase agreement with Tenaga Nasional soon.
PASUKHAS PLANS TO BID FOR MALAYSIAN WASTE-TO-ENERGY PPP
Kuala Lumpur-listed developer Pasukhas Group plans to participate in the tender of a waste-to-energy PPP in Malaysia’s Malacca state. The company has partnered with a holding company owned by the Malacca government, and with local firm Proto Three Sixty to bid for the project.
If the consortium wins, Pasukhas will own a majority stake and will be in charge of arranging the financing. Malaysia aims to increase its renewables capacity to 18 GW from the current 8 GW.
The Malacca project will have a waste processing capacity of 800 metric tons per day, and will produce approximately 18 Mw/h. It will be located in the Sungai Udang region. The concession includes three years for construction and a 25-year operation period.
List of key transactions - Malaysia Q3 2021
List of Upcoming Proejcts - Malaysia Q3 2021
Source: Inframation, YOG INFRA analysis
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