RM300M DEAL: Conglomerate to exit power-generation business
SIME Darby Bhd is selling Port Dickson Power Bhd (PDP) to Malakoff Corp Bhd for RM300 million as it seeks to exit the power-generation business.
Sime Darby said the disposal is in line with its long-term strategy to be a leader in its main businesses of plantations, industrial equipment, motors, property, energy and utilities.
Group president and chief executive Tan Sri Mohd Bakke Salleh said the power purchase agreement for PDP will expire in 2016.
“Since we are focusing on our five core businesses, the decision was made to not scale up our investments in the power industry. We will use the proceeds to strengthen our existing businesses,” he said.
Malakoff, through its subsidiary companies, will acquire the remaining 75 per cent of PDP it does not already own and 100 per cent of the operation and maintenance company, Sime Darby Biofuels Sdn Bhd, from Sime Darby Energy Sdn Bhd, a wholly-owned unit of Sime Darby.
The price takes into account the projected cash flows of PDP and SPV. The deal is expected to be completed by June 30.
PDP’s gas-fired power plant has a total capacity of 440 megawatts (MW) and is located on a 26.8ha site in Tanjung Gemuk, Port Dickson, Negri Sembilan.
The plant operates according to the “open cycle gas turbine mode” and supplies electricity to Tenaga Nasional Bhd for peaking and emergency requirements.
It currently supplies electricity to TNB under a 21-year power purchase agreement that will be expiring in January 2016.
Sime Darby Energy & Utilities executive vice-president for non-China operations, Datuk Jauhari Hamidi, said the dynamics of the power industry have changed considerably since Sime Darby first made its investments in the sector.
“Our decision to exit from this asset reflects an assessment of our abilities to best capitalise on the opportunities in the various sectors in which Sime Darby has interests in.
“Having said that, our trading and engineering operations in Malaysia, Singapore and Thailand are building capabilities to capture emerging opportunities in these markets,” he said.
He added that continuous urbanisation and industrialisation are expected to drive demand for engineering products and services.
- THE BUSINESS TIMES
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