Published January 29, 2009

Janakuasa eyes 2nd Vietnam power plant

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(KUALA LUMPUR) Janakuasa, which won a US$1.5 billion job in Vietnam this month, is in talks to build a second power plant there as well as working to secure another deal in India, says Malaysia's Business Times newspaper.

Janakuasa Sdn Bhd expects its plate to be full with projects to build power plants with a combined capacity of 4,400 MW over the next few years, its chief executive officer said.

The company, which shares the same core shareholders as a Perlis independent power producer, won a US$1.5 billion contract to build a plant in Vietnam earlier this month. It is in talks for a second plant in Vietnam and is also working to secure another deal in Chennai, India.

Janakuasa which had plans to venture into Thailand and Indonesia have now decided to put these on hold. 'We cannot bite more than three (power plant jobs), otherwise we get indigestion,' said Ti Chee Liang, CEO of Janakuasa.

The company is expanding abroad as opportunities at home are getting scarce. Demand for power is slowing in Malaysia due to a sluggish economy, while supply exceeds consumption by over 40 per cent.

Vietnam's power demand is expected to grow between 17 per cent and 22 per cent between 2006 and 2015, among the fastest in Asia after China. Mr Ti is certain that Janakuasa is the first Malaysian company to build a power plant in Vietnam. Other companies such as Gamuda Bhd and Mega First Corp Bhd have chosen to develop power plants in Laos instead.

For Janakuasa's Duyen Hai 2 project, it will borrow 80 per cent of the US$1.5 billion total cost. It is already in talks with some Malaysian banks for US dollar loans for a 10-12 year period.

'We think that the tariff will be bankable enough that by the 12th year, the loan will be fully repaid,' Mr Ti said. 'I am more conservative. If I can keep the loan short by sacrificing my dividends in the early years, why not?'

As for the equity portion, the shareholders of Janakuasa have their internal funds to draw upon, Mr Ti said. There is also an option to allow Teknologi Tenaga Perlis Consortium Sdn Bhd (TTPC) to invest in Duyen Hai, once the project is more 'fleshed out'.

TTPC is the operator of a 650 MW gas-fired power plant in Perlis. Mr Ti and Dewan Negara speaker Abdul Hamid Pawanteh are the core shareholders of TTPC.