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Infrastructure & PPPs in Malaysia - Q3 2023 Update

YOG INFRA Q3 2023 insight series

MALAYSIA is looking to augment it's PPP policy with an aim to deliver increased social benefits, private investment, and fiscal management. through infrastructure development. The country is also exploring cross-border energy trade, including feasibility for establishing an energy exchange. There is continued interest from international developers to support country's decarbonization agenda through set-up of new renewable energy projects.

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

 

July 2023

TENAGA UNIT TO BUILD ROOFTOP SOLAR FOR GLOVE MAKER

A unit of Malaysian electricity utility Tenaga Nasional (TNB) has agreed to develop rooftop solar facilities for local glove maker Central Medicare with capacity of more than 6 MW. TNB's subsidiary GSPARX will develop the projects at Central Medicare's factory and hostel sites in Teluk Intan in the Perak state of Malaysia.

The project will provide 8.2 GWh of solar energy per year and reduce over 5,000 metric tonnes of CO2 each year. It is estimated to save MYR 72 Mn (USD 15.7 Mn) in electricity bills over 25 years. GSPARX is a solar rooftop arm of TNB and has so far secured 414 projects with commercial, industrial and government organizations, with a capacity of 279.2 MW. GSPARX is a solar rooftop arm of TNB and has so far secured 414 projects with commercial, industrial and government organisations, with a capacity of 279.2 MW.


MACQUARIE’S BLUELEAF TO DEVELOP HYBRID SOLAR PROJECTS IN MALAYSIA

To realize the Government’s decarbonization agenda and the country’s transition towards sustainable energy solutions, Blueleaf Energy, a leading green renewable energy platform and a standalone portfolio company of Macquarie Asset Management’s Green Investment Group, has inked a Memorandum of Understanding (MoU) to develop a 1 GW of hybrid solar photovoltaic projects in Malaysia’s Renewable Energy (RE) industrial zone. The MoU is signed with UEM Group Berhad (UEM Group), a wholly owned subsidiary and the green investment platform of Khazanah Nasional Berhad (Khazanah), the sovereign wealth fund of the Government of Malaysia; and ITRAMAS Corporation (ITRAMAS), the largest vertically integrated solar power plant developer, EPCC and service provider in Malaysia.

The MoU took place at the launch of Malaysia’s National Energy Transition Roadmap (NETR), which targets to achieve 70 percent of the country’s capacity to come from renewable sources by 2050. Blueleaf Energy and UEM-ITRAMAS will collaborate on the planning, structuring, off-take arrangements, construction, and operation of the hybrid solar PV project.


MALAYSIA PLANS ENERGY EXCHANGE FOR RENEWABLES EXPORTS

Malaysia is looking to introduce an energy exchange to facilitate renewable energy exports to neighboring nations. The country's Energy Commission is drafting a working paper. The setting up of the new exchange will be announced this year 2023. It will look at some of the available models and among the goals is to first secure enough RE to supply in the country and then ensure to get the best value for sales abroad and allow that value to be reinvested to boost the RE sector in Malaysia. Malaysia is expected to explore other energy generation sources such as mini-scale hydropower and battery storage systems and it needs to look at battery storage systems that can play a pivotal role to support cheaper RE prices. There is also a need for tax reforms to support the industry.


BAIN-BACKED CHINA FIRM PLANS MALAYSIAN DATA CENTRE EXPANSION

Chinese data centre developer Chindata Group, which is controlled by Bain Capital, plans to expand its MY03 Data Centre Campus in Malaysia as part of its international push. The company’s overseas unit Bridge Data Centres signed an agreement to build 3 new data centre facilities in MRAINTI Park, a tech park close to Bandar Malaysia, a 486-acre transit-oriented development by 1 Malaysia Development Berhad in Kuala Lumpur. The Chinese group will also build a 132kV substation.

The expansion will add 48 MW of capacity to the MY03 project, with the 16 MW first phase to be completed by the third quarter of 2025 and 32 MW second phase to be operational by the fourth quarter of 2027. The new facilities will also feature more energy-efficient and low carbon solutions. Currently, the MY03 facility has a 16 MW capacity. The move was taken to meet the demand driven by the growing digital economy in Malaysia.


SARAWAK ENERGY PLANS FOR 400 MW OF NEW FLOATING SOLAR CAPACITY

Malaysia-based Sarawak Energy plans to add 400 MW of additional floating solar power capacity by 2030 in an attempt to export renewable energy (RE) to neighboring countries including Indonesia, Brunei, and Singapore. Of the total projects in the pipeline, works have already commenced on the first facility, a 50 MW unit located at Batang Ai dam. Energy production from the site is expected to commence in 2028.

Sarawak Energy has signed agreements to export between 30 MW to 50 MW of RE to Sabah by 2024. The company is also looking to sign power purchase agreements (PPA) to export energy to Brunei and Singapore. Feasibility study to export energy via undersea cable has been completed. However, high cost and technical issues pose a challenge.


MALAYSIA TO SEEK PROPOSALS FOR HIGH SPEED RAIL PPP

Malaysian finance ministry-owned MyHSR Corporation will seek proposals to develop and operate the Kuala Lumpur-Singapore High Speed Rail project through a public-private partnership. The procuring agency has scheduled a briefing for potential bidders. MyHSR had engaged with a few private companies at an initial information gathering stage in March to evaluate interest, capabilities and resource requirements before deciding to go ahead with the project, it said in the press release. Local and international companies will be eligible to participate.


August 2023

MALAYSIAN AND LAOTIAN STATE ENERGY FIRMS TO EXPLORE RENEWABLES TRADE

Tenaga Nasional (TNB) plans to partner with Electricite Du Laos (EDL) to facilitate cross-border renewable energy trade with a projected value of MYR 460 Mn (USD 100.9 Mn) for 200 MW in 2025 and up to MYR 2.3 Bn (USD 495.6 Mn) for 1 GW beyond 2030.

The Malaysian state utility is looking to set up a collaboration committee with the Laotian government-owned power company to optimize resource utilization, bolster energy security, and promote knowledge and expertise sharing. Potential export to Malaysia of the renewable energy generated in Laos will be conducted through the Laos-Thailand-Malaysia Power Integration Project, among other avenues.

The move is expected to boost TNB’s strategic partnerships and the execution strategy with major energy players as TNB Genco-EDL has signed a memorandum of understanding to explore investment and offtake opportunities for renewables projects in Laos.


WASTE-TO-ENERGY PLANT PLANNED IN SELANGOR

YTL Power International Bhd and KDEB Waste Management Sdn Bhd will develop a waste-to-energy (WtE) plant in Selangor, Malaysia. The plant, located in Rawang, is expected to cost around RM 4.5 Bn (USD 969.8 Mn).

Additionally, Aurecon Lestari Sdn Bhd will be in charge of engineering, designing and asses the environmental and social impact of the project. Once operational, the plant will be able to process 2,400 tonnes of municipal waste per day from Petaling Jaya, Hulu Selangor, Shah Alam, Subang Jaya, Ampang Jaya and Selayang. The WtE plant is expected to generate a gross capacity of 58 MW. Moreover, the waste generated from the plant will be used for the production of cement.


September 2023

CHINESE COMPANIES TO INVEST IN MALAYSIAN INFRASTRUCTURE PROJECTS

Chinese companies have signed 3 memorandum of understanding (MoUs) worth MYR 19.4 Bn (USD 4.1 Bn) to invest in infrastructure projects in Malaysia. One of the MoUs is between Cita global and Shanghai Sus Environment, mainly for waste-to-energy plants in Malaysia, while the second MoU is between PM Access World and Beibu Gulf International Port Group for warehousing and logistics, aimed at developing trade between China's Guangxi province and Malaysia. The third MoU is between Sime Darby Oils International and Guangxi Beibu Gulf Port Group for a trading and distribution centre for refined palm oil in Qinzhou. Beijing BECA Sci-Tech Co will build a USD 5.2 Bn integrated petrochemical and refinery facility in Malaysia's Lawas town. Beijing BECA will work with Sinopec Engineering and China International Trust and Investment Corp on this project.


MALAYSIA TO REVIEW PPP POLICY IN NATIONAL DEVELOPMENT PLAN

The Malaysian government is re-evaluating its public-private partnership (PPP) policy. The goal of this is to ensure the policy's delivery of increased social benefits, private investment, and fiscal management. A clear PPP policy on land exchange methods will also be introduced. Transparency in procurement and fiscal reforms which include the restructuring of electricity and fuel subsidies for end consumers were also mentioned during the parliamentary.


ENERGY ROADMAP LAUNCHED FOR SABAH’S CAPITAL CITY

The Government of Kota Kinabalu, in collaboration with the Energy Commission of Sabah (ECoS), has launched the Sabah Energy Roadmap and Master Plan 2040 (SE-RAMP 2040) for the Malaysian city. The roadmap covers energy security, energy affordability and environmental sustainability.

The plan is in line with the state’s strategic roadmap and initiatives and the state government expects to take over the regulatory authority from the central government on power supply and renewable energy (RE) in January 2024. It aims to ensure a dependable power supply which is easily accessible and has wide coverage at an affordable price. Additionally, the plan also complements the National Energy Policy under the National Energy Transition Roadmap 2050 (NETR). The masterplan is a collaboration between the State and Central Government under the Malaysia Agreement 1963 (MA63).


SIEMENS TO BOOST ENERGY EFFICIENCY RE DEVELOPMENT IN MALAYSIA

German-based Siemens Mobility has signed a memorandum of understanding (MoU) with Progressture Power Sdn Bhd (Progressture Solar) to advance energy efficiency (EE) and renewable energy (RE) under the green energy transition agenda in Malaysia.

In this partnership, Siemens will provide energy audit services, energy efficiency solutions and energy management through digitalization and automation. This will help businesses to reduce energy costs, improve overall operations and meet environmental, social, and corporate governance (ESG) targets. This is in line with the country’s National Energy Transition Roadmap (NETR) and its goal of achieving a 70% RE capacity by 2050.


PLANS APPROVED FOR DEVELOPMENT ALONG THE ECRL

The Government of Malaysia has approved a master plan for the development along the 665 km-long East Coast Rail Link (ECRL) project. The document outlines the development plans till 2040 and will serve as a reference for state and local authorities. The plan aims to attract investments to boost sustainable development in the region. Moreover, a guideline was issued to improve the government’s approval process for the construction of electric vehicle (EV) charging stations. A total of 1,246 EV charging stations are currently operating and are aimed to increase to 10,000 by 2040. Under the National Energy Transition Roadmap (NETR), it is aimed at EV use to reach 38% in 2040 and 80% in 2050.


12TH MALAYSIA PLAN BUDGET UP BY RM 15 BILLION(USD 3.2 BN); TARGETS 5 SMART CITIES BY 2025

The government has increased the budget for the 12th Malaysia Plan (12 MP) by RM 15 Bn (USD 3.2 Bn), bringing the total allocation to RM 415 Bn (USD 88.5 Bn) . For the remaining period of 2023-2025, the government will spend more than RM 90 Bn (USD 19.2 Bn) annually to expedite progress under the plan. The increased budget will be used to improve management quality and reallocate subsidies. Moreover, the 12 MP Mid-Term Review (MTR) calls for at least 5 cities to be recognized as smart city early adopters by 2025. Development of smart cities will be accelerated during the remaining two years of the plan and will be based on the Sustainable Cities and Communities-Indicators for Smart Cities standard.

To improve resiliency, the adoption of the Environmentally Friendly Drainage Master Plan (PISMA) will also be emphasized especially in flood-prone urban areas. The focus will be on improving the drainage system in these locations. When initially tabled in 2021, the plan had an allocation of RM 400 Bn (USD 85.3 Bn). Till 2023, around 31% of the 175 set targets under the 12 MP have been achieved, with 59% on schedule.


IB VOGT KUALA MUDA TO HANDLE 40 MW SOLAR PROJECT

The project involves the development of a 40 MW solar project in Kedah state by Ib Vogt. The solar farm is expected to cost USD 35 Mn. The solar plant is being developed in the Kuala Muda district in Kedah and will have bifacial solar modules built on a single axis tracker system. It will produce solar power for an average annual consumption of about 15,000 households. The project will start construction by the middle of 2024.

The project was awarded to ib vogt under the Corporate Green Power Programme (CGPP), a virtual power purchase programme from Energy Commission Malaysia for corporates to procure renewable energy. The project will supply close to 30 MW ac capacity of solar energy to Samsung SDI Energy Malaysia.

 

List of key transactions - Malaysia Q3 2023

Source: Inframation, YOG INFRA analysis

 

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