SEB aims to set aside RM22bil to expand power footprint

PETALING JAYA: Sarawak Energy Bhd (SEB) has targeted to set aside some RM22bil to expand its power footprint over the next 10 years.

A key point is that demand for power from industries within the Sarawak Corridor of Renewable Energy (Score) has already exceeded what SEB is able to supply at this juncture. Score has attracted more than RM26bil investments exceeding the target set two years ago.

SEB has signed into a Power Purchase Agreement (PPA) to purchase power at 6.25 sen/kWh from Sarawak Hidro Sdn Bhd said AmResearch analyst Mak Hoy Ken. This is subject to an escalating rate of 1.5% per year.

“To be sure, some 70% of the Bakun dam's firm capacity of 1,771MW has already been committed where we gather that SEB is already in discussions with up to 25 potential clients,” said Mak.

On Wednesday, AmResearch had hosted a presentation for SEB, where the latter was represented by its chief executive officer Torstein Dale Sjotveit and members of senior management team. Over 40 institutional fund managers attended the event.

Mak added that the first of the 2,400MW capacity, which will be provided by Bakun dam's eight turbines, was due to be fully commissioned by August.

Meanwhile, the construction of the 944MW Murum Dam is due to be completed by end-2013. Combined, both hydro dams will provide SEB with an estimated total supply of some 3,344MW of power.

SEB was privatised in end-2009 by the Sarawak government. At that time, sources said, one of the main reasons for the privatisation was to speed up Score's implementation, apart from giving the government more financing flexibility.

With the Bakun PPA finally sealed, Mak believes SEB is in a firm position to offer long-term supply of sustainable power at attractive rates.

In April, SEB had signed separate PPA term sheets with the first batch of four companies that are expected to require an estimated 1,300MW of power.

Furthermore, SEB is in advanced negotiations with other potential investors for another 400MW to 500MW of power needs.

Mak said its channel checks indicated that SEB had lined up new plant-up programmes to boost its generation capacity to some 7,000MW by 2020 from the existing capacity of 1,328MW. These may include the construction of five more hydro dams.

Yesterday, The Star reported that SEB was close to making a final decision on its investment in a new 600MW coal-fired plant in Balingian, Mukah division. The plan is scheduled to be completed by 2015.

“More importantly, we believe that SEB's accelerated capital expenditure programme would require massive amounts of basic infrastructure to feed the increasing energy requirements within the Score, for example roads, power plants, ports, airports and transmission systems,” said Mak.

He said that this would likely trigger a fresh roll-out of over RM2bil worth of basic infrastructure projects to support the massive investments. This is expected to come in batches since June.