Jimah Energy

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In 2004 Jimah Energy Ventures Sdn Bhd (JEV) began development of a 1,400 MW coal-fired plant at Mukim Jimah in the Pork Dickson area of Negri Sembilan State. The plant was to sell power to Tenaga Nasional Berhad (TNB, the Malaysian utility) for RM 0.135 per kWh (US$ 3.6 cents per kWh) under a 25-year year power purchase agreement signed in August 2004. The PPA contained options for the sales agreement to be extended for three additional periods of five years each, subject to mutual agreement. The PPA contained a risk-sharing mechanism not seen in previous IPP agreements in Malaysia (which were take-or-pay contracts), where TNB guarantees to purchase 50% of the project’s generation for the first 9 months of the plant’s operation, 85% for the next 5 years and then 80% for the remainder of the PPA. JEV was initially 100% owned by the Negeri Sembilan royal family, but intended to sell a 20% stake to TNB and to offer to sell a 15% stake to the Negeri Sembilan state government. Financial closure was reached in April 2005. The project will have less than 5% equity, with at least 95% debt. Financing came from a RM 6.1 billion (US$ 1.6 billion) Islamic funding facility arranged by AmMerchant Bank, RHB Sakura Merchant Bankers, Malaysian International Bankers and Bank Muamalat Malaysia. The funding includes a RM 167.7 million (US$44 million) bank guarantee, an RM72 million (US$19 million) standby letter of credit and up to RM4.84 billion (US$1.27 billion) of senior bonds and RM1 billion (US$ 263 million) of subordinate bonds. Bonds will have durations ranging from 1.5 to 16.6 years. Construction began in January 2005, and the first 700 MW turbine was expected to commence operation in January 2009, with the second turbine to commence in July 2009. The plant was to be constructed by a Japanese consortium led by Sumitomo and including Ishikawajima-Harima Heavy Industries, Toshiba and Taisei Corporation. Intention to sell stakes to TNB and state government (so % private will drop). Very high debt levels, so equity stakes low.