Troubled Northern Utility up for sale again?

PETALING JAYA: Speculations have resurfaced that troubled Northern Utility Resources Sdn Bhd (NUR) is up for sale again, industry sources said.

“The receivers of the company are eager to get NUR off their hands as it has been put under receivership since 2004. Currently NUR has a licence to sell electricity back to the national grid, and that might attract buyers,” said a source.

NUR operates an in-situ independent power utility (IPU) within the Kulim Hi-Tech Park (KHTP) in Kedah and is the first IPU awarded a 30-year concession in 1997 to build a power plant and distribute electricity in the hi-tech park.

The shareholders of NUR are Manfield Development Sdn Bhd with 40% interest and Jalinan Muhibah Sdn Bhd, Khazanah Nasional Bhd and Tenaga Nasional Bhd (TNB) each with 20% interest.

Unlike independent power producers (IPPs), this “mini power utility'' did not need to sell electricity to TNB and was not governed by a power purchase agreement. It instead sells and distributes electricity directly to end-users, which in turn makes it relatively more vulnerable to downward swings in take-up rates.

Originally planned as a 450MW combined cycle plant to meet the needs of customers (wafer fabrication and electronics plants) in the hi-tech park, the project failed to financially support itself with the onslaught of the Asian financial crisis.

In 2002, NUR defaulted on its loans following withdrawal of investors and slow rate of investment in KHTP.

Subsequently, the Government stepped in to change its licence that would allow NUR to sell power to the national grid. However, it failed in signing a power purchase agreement with TNB despite being in discussion for over two years.

Currently, it owes an estimated RM1.4bil to a consortium of banks, namely Malayan Banking Bhd, CIMB Bank Bhd, RHB Bank Bhd and AmBank Bhd. NUR was then placed under receivership in November 2004 to Ernst & Young.

The last update was a statement by Ernst & Young last year, which had opened the opportunity to Malaysian companies, including joint ventures or consortia with foreign equity participation not exceeding 25%, to submit their expressions of interest to acquire NUR's 100% equity in a group of three companies.

It said NUR currently generates, supplies, transmits and distributes about 170MW of electricity at gazetted tariffs to multinational tenants in the 1,700 ha industrial park.

The window for submission of interest subsequently ended on May 12, 2011, and that was the last development for NUR.

Checks with the Registrar of Companies showed that the company has non-current assets of RM1.35bil and current assets of RM40.7mil, while it recorded a loss of RM103.1mil against a revenue of RM85.1mil for its financial year ended 2004.