Malaysian company JAKS Resources Bhd's venture as an independent power producer (IPP) in Vietnam is meant to buffer the company from the ups and downs of steel manufacturing and construction industries.
Group general manager, finance, Chee Seong Heng said the company's latest major project to build and operate a coal-fired power plant in Vietnam was part of its plan to diversify its business.
“Our aim is to have a recurring income that will benefit the company in the long run, and one way to achieve this is by securing concessions such as the IPP business,” he told StarBiz.
Last month, JAKS signed memoranda of agreements (MoA) with various parties, including government agencies of Vietnam, for the proposed development of a 1,200 megawatt (MW) thermal power project worth about US$1.6bil (RM5.12bil) in Hai Duong province.
“The IPP, which is under the build-operate-transfer concept, will provide recurring income over 25 years,” said Chee.
Because of its lack of experience in such jobs, JAKS is relying on expertise from China. It has signed an MoA with China Huadian Engineering Co Ltd for the engineering, procurement and construction portion of the project.
“The IPP project is scheduled to start by the fourth quarter this year. Alhough we are now at the MoA stage, this project is already confirmed as all major agreements have been signed,” said Chee.
The commercial operation of the first unit of 600 MW is scheduled to start in the fourth quarter 2014, while the second unit of 600 MW will follow in the second quarter 2015.
In a recent note, RHB Research Institute said JAKS' successful completion of the power plant would strengthen its bid for other similar projects in Vietnam.
Vietnam's power demand is expected to grow by more than 10% per year over the next five years.
Chee also said the company was close to securing a RM500mil construction contract for a mixed property development in Subang Jaya.
RHB Research Institute estimated JAKS's total unbilled construction order book at RM1.31bil.
Currently, manufacturing contributes about 55% of the company's revenue, while construction accounts for around 45%. The rest comes from trading.
Vietnam IPP venture allows JAKS to diversify ops
JAKS venture as an independent power producer in Vietnam is meant to buffer the company from the ups and downs of steel manufacturing and construction industries.
Source: dtinews.vn
