KUALA LUMPUR: A consortium comprising Mudajaya Group Bhd, Eversendai Corp Bhd and Alstom is said to have been appointed the main engineering, procurement and construction contractor (EPCC) for the expansion job of the 2,100mw Tanjung Bin power plant.

A signing ceremony between the companies and MMC Corp Bhd is expected to be held this week, sources told The Edge Financial Daily.

“The 1,000mw expansion for Malakoff’s coal-fired plant is expected to cost around RM4.9 billion to RM5 billion,” said one of the sources. As such, this values the extension project at RM5 million per mw.  

Sources say Mudajaya’s portion as the main civil contractor is expected to be RM950 million while Eversendai’s contract is estimated at RM140 million.

Located in Johor, Tanjung Bin is the first private coal-fired plant in Malaysia and is Southeast Asia’s largest coal-fired plant.

Of the two local companies, Mudajaya is expected to be awarded the civil work portion of the project and Eversendai the boiler erection.

The source added that Alstom will be awarded the equipment portion of the project.

It should be noted that the consortium was also awarded similar projects for the 1,000mw expansion of Tenaga Nasional Bhd’s (TNB) 2,100mw Janamanjung plant in June last year.

The expansion of the 2,100mw coal-fired plant, located in Perak, also carried a similar price tag of close to RM5 billion.

As such, the cost of the various portions could turn out to be similar to the prices quoted for the Janamanjung expansion.

Mudajaya had previously announced that the contract cost for the civil work portion of the Janamanjung expansion came to RM720 million. The company has started works on the project, with an expected completion date of November 2013.

Eversendai reported that the package for the mechanical erection of the boiler and auxiliary equipment for Janamanjung’s fourth unit would be worth RM132 million. The company also stated that several other packages for the same project are still under negotiations.

The award of the Tanjung Bin expansion project will undoubtedly give a boost to the order book and bottom line of both companies in the coming months.

Mudajaya and Eversendai have an order book of around RM4.6 billion and RM1.6 billion respectively, according to some latest research reports.  

For Eversendai, in particular, the company announced in January that it was in the process of wrapping up its portion of the work for Janamanjung.

In fact, last October, Zelan Bhd received a letter of intent from Mudajaya in relation to the Tanjung Bin 1,000mw expansion.

In the announcement, Zelan said Mudajaya had decided to subcontract a portion of the civil work for Tanjung Bin at RM300 million. However, the award is subject to the consortium of Alstom, Mudajaya and Eversendai being appointed the EPCC for the Tanjung Bin extension. As such, Zelan is expected to be one of the beneficiaries of the project once the award of the contract becomes official.

This could also be an indication that the consortium could also gain if TNB goes ahead with plans to add another 1,000mw to Janamanjung’s capacity.

Given that it had previously been awarded the Janamanjung project, it could mean the consortium would be the top pick if the second expansion by the national utility comes through.

To recap, in order to cope with the growing electricity demand and to make up for the power not coming from the Bakun Hydroelectric Project, TNB had announced that it was planning to add another 1,000mw of capacity to its Janamanjung coal-fired plant. Originally, the government proposed for high voltage undersea cables to be built to channel the power from the mammoth dam in Sarawak to Peninsular Malaysia. However, the plan fell through when it was decided that the power from Bakun would be used for the development of the Sarawak Corridor of Renewable Energy (Score).  

The government then gave the green light for the expansion of Malakoff’s Tanjung Bin, also for an additional 1,000mw.  However, it still remains to be seen at this juncture whether TNB’s second expansion will see the light as the national power provider copes with the more pressing gas issue that caused the company to slip into the red.

Mudajaya climbed four sen or 1.3% to RM3.02 with 1.18 million shares traded yesterday. Eversendai added one sen to RM1.64 yesterday on a thin volume of 705,900 shares while Zelan gained 1.5 sen or 3.2% to 49 sen on a volume of 4.21 million shares yesterday.

Shares in Mudajaya and Zelan have rallied strongly since the start of the year, and have risen 37.9% and 32.4% year-to-date respectively. Eversendai shares, on the other hand, have declined 3.5% year to date.

This article appeared in The Edge Financial Daily, February 22, 2012.