Hai Duong Thermal Power Project Has One More Investor | Intellasia

Jaks Resources Berhad Group (JAKS) (Malaysia) has officially terminated an agreement to establish a joint venture with Island Circle Investment Holding Limited (Malaysia) and Meiya Power Limited (China) to develop Hai Duong thermal power project worth $2.25 billion. Instead, Jaks has found two new partners.

In a report sent to Malaysia Stock Exchange (Bursa Malaysia) recently, Jaks Group said that the agreement to establish a joint venture with Meiya Power and Island Circle has not been completed because some conditions in the previous agreement were not met”.

Besides, the investor also ended the EPC contract with contractors of China National Technical Import and Export Corp and Tianjin Electric Power Construction Co. Jaks announced that the company will not have to compensate for the cancellation.

Instead, Jaks said that Jaks Power Holding Limited (JPH), a subsidiary of Jaks and holding 100 percent capital in Jaks Pacific Power Pacific (JPP) that invested in Hai Duong thermo power project, has signed two agreements to sell a half of JPP’s capital for Wuhan Kaidi Electricity Power Engineering Company (Kaidi- China) and Sanjung Merpati Sdn Bhd (SMSB-Malaysia).

After completing these agreements, Kaidi and SMSB will own 40 percent and 10 percent capital of JPP respectively. 50 percent of the remaining capital will be still owned by JPH. Additionally, Jaks chose Kaidi as an EPC contractor of Hai Duong thermal electricity project with contract value of $1.7 billion under the turnkey method.

However, the agreements’ effectiveness depends on Kaidi’s EPC contract and the approval of JPH’s shareholders as well as the approval of Chinese authorities.

Hai Duong thermal electricity project was licensed in August 2011 according to build-operate-transfer (BOT) contract with the Ministry of Industry and Trade. The total investment was $2.25 billion. Jaks estimated 80 percent of the capital will be borrowed and 20 percent was their owned capital. According to Jaks, as of November 31 2012, the investor invested $30.4 million to the project.

According to the investor, this power plant of 1,200 MW capacity was expected to start in the first quarter of 2014. The first and second generators will be generated in turn in the third quarter of 2017 and the first quarter of 2018. The annual output was estimated at 7.5 billion kWh.

Previously, as planned in September 2011, Jaks would prepare a lot of work in order to finish capital arrangement and officially build the plant in June 2012. As planned, in the fourth quarter of 2016, the first generator will be put into operation and in the second quarter of 2017, the second generator will be completed. However, in the last October, Jaks has postponed the construction progress.

“The investment of Kaidi, JPH and SMSB will support the strong connection between investors and contractors” said Jaks’ representative.

Currently, Kaidi is also a building contractor of Mao Khe thermal power plant (440 MW) and Thang Long thermal power plant (600 MW) in Vietnam. Kaidi has a good relationship with many banks in China. “This can help arrange capital better” said the representative.

Meanwhile, SMSB’s investment will help Jaks reduce risks when investing in Vietnam.

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