YTL defends power plan

[Vivian]

"The proposal to invest almost RM4 billion for a new 1,200-megawatt plant could help boost the slowing economy and create jobs, a source says

MALAYSIA could see a wave of fresh investments to the tune of billions of ringgit by independent power producers (IPPs) if the government lets them extend existing contracts and build new power plants..

A source close to YTL Power International Bhd (4677) said the proposal it submitted to the government last year could help boost the slowing economy and create jobs.

YTL Power has proposed to invest almost RM4 billion, assuming it can build a new 1,200-megawatt plant, to replace its ageing plants.

The source explained that the proposal was not to double YTL Power's capacity but rather for the group to maintain its current generation size.
The new plant, to be built at no cost to Tenaga Nasional Bhd (TNB), would use 20 per cent less gas.

"The country would save 20 per cent of the gas currently utilised. The quantity of gas saved could be redeployed for use by other industries," said the source.

This could help Malaysia deal with gas supply issues given Petroliam Nasional Bhd's uncertainty of new supply after 2016.

TNB would also benefit from having to pay less for fuel, which IPPs currently pass through to the national utility, he said.

YTL Power made its proposal sometime in July last year in response to the call by the Minister of Energy, Water and Communications for more efficient IPPs which could produce the same amount of power with less gas.

It was also at a time when oil prices were around US$130 (RM452) a barrel. The gas price moves in tandem with oil and was at high levels last year.

Oil prices have since fallen to about US$46 (RM160) a barrel. However, it could rise again in the future.

"It may be prudent for the government to consider repowering to mitigate against such risk," the source said.

At present, YTL Power operates a plant each in Terengganu and Johor, with a total capacity of 1,212MW. It sells power to TNB under long-term contracts that expire in 2015.

According to the source, YTL Power might be willing to strike a lower price for power from its proposed new plant.

Under the existing contract, YTL Power sells electricity to TNB at 15 sen per kilowatt-hour (kWh). Between 2001 and 2003, it sold excess power to the utility at 10.9 sen per kWh.

In November last year, Energy, Water and Communications Minister Datuk Shaziman Abu Mansor said Malaysia did not need a new power plant until end-2009 owing to high levels of spare capacity.

The 1,400MW Jimah coal plant in Negri Sembilan will push spare capacity over 50 per cent when it starts this year.

TNB may also not be worried about new capacity by 2015, said AmResearch analyst Alex Goh.

" ... the supply could come from the 2,400MW Bakun hydro-electric dam and undersea submarine cable, which will be operational by then," he said in a report. "

By Shahriman Johar @ www.btimes.com.my
http://www.btimes.com.my/Current_New...nme-2/Article/

Related Websites:-

YTL Corporation Berhad (http://www.ytl.com.my/)