Four firms in Kepong incinerator shortlist

by **Cals** Tue 23 Sep 2014, 01:35

Business & Markets 2014

Written by Sulhi Azman of theedgemalaysia.com

Monday, 22 September 2014 09:35

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Abdul Rahman said in July that the award of the incinerator project will be announced next June, pending a detailed environment impact assessment. Photo by Chu Juck Seng

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KUALA LUMPUR: UEM Environment Sdn Bhd, DRB-Hicom Bhd, Malaysian Recources Corp Bhd (MRCB) and Puncak Niaga Holdings Bhd have been shortlisted to bid for the controversial 1,000-tonne per day (tpd) waste-to-energy incinerator project in Taman Beringin, Kepong here, which is estimated to cost up to RM800 million.

According to an industry source, the four companies beat 29 other competitors to be in the shortlist.

It is understood that they have teamed up with international companies from Japan and South Korea to jointly bid for the concession, which may be for up to 30 years.

A source said UEM Environment — the environmental arm of UEM Group Bhd — is teaming up with Japan’s Mitsubishi Heavy Industries Ltd to jointly bid for the proposed incinerator project, while Puncak Niaga is teaming up with Japan’s Hitachi Zosen Corp.

DRB-Hicom, meanwhile, is partnering MMC Corp Bhd’s 51%-owned subsidiary Malakoff Corp Bhd and Japan’s Sumitomo Corp in bidding for the incinerator project.

Additionally, MRCB is collaborating with South Korea’s Hyundai Rotem Co, an engineering, procurement and construction company.

“As this is a private financing initiative (PFI), the bidder must bring in a strong technology partner with sound financial capability and proven track record in providing environmental solutions. Ideally, the partnership should be on a 51:49 basis,” the source told The Edge Financial Daily.

“The technology partner must have at least 10 years of experience in operating an incinerator, with an 85% efficiency running at a rate of 8,100 hours a year,” the source said.

It is understood that the Urban Wellbeing, Housing and Local Government Ministry has suggested a 50% local content quota for the proposed incinerator.

The source said that it would cost between RM600 million and RM800 million to build the proposed incinerator.

“Previously, the prime minister had scrapped the proposed incinerator in Broga as it would cost about RM1.5 billion to build. However, for [the proposed incinerator in] Taman Beringin, it would be good if the bidder can construct a stoker-type incinerator which is efficient and cheaper,” the source said.

The source added that the incinerator is also expected to generate some 15mw of electricity that is eligible for feed-in-tariff benefits.

Upon completion of the incinerator in 2018, the source estimated the tipping fee — levied on the waste sent to Taman Beringin — to be at between RM80 and RM90 per tonne.

In July, Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan said that the award of the incinerator project will be announced next June, pending a detailed environment impact assessment, which is currently being undertaken by Universiti Teknologi Malaysia.

The Edge Financial Daily had on Aug 13 reported that Puncak Niaga was among the four shortlisted for the incinerator project.

The proposed site for the incinerator in Taman Beringin is at the present site that houses a waste transfer station and handles a total of 2,400 tonnes of waste every day, above its 1,700-tonne capacity.

Despite protests by residents over its environmental risks, the federal government had maintained that an incinerator is needed in Taman Beringin to deal with the increasing solid waste generation in the Klang Valley, as the sanitary landfill in Bukit Tagar, Selangor is reaching its capacity.

However, KUB-Berjaya Enviro Sdn Bhd, a 60:40 joint venture between Berjaya Corp Bhd and KUB Malaysia Bhd, the operator of the Bukit Tagar landfill, has come out to say that the landfill has a capacity of about 120 million tonnes, and can cater to waste generated in Kuala Lumpur and Selangor for over 65 years.

On a separate matter, UEM Group recently divested UEM Environment to its parent Khazanah Nasional Bhd, following the government’s initiative to invest in sustainable environmental projects.

UEM Environment is currently undergoing reorganisation and rebranding exercises, which will see its business diversify to renewable energy from waste management currently.

This article first appeared in The Edge Financial Daily, on September 22, 2014.

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