Ranhill Utilities to undertake scope of works in PetChem project

KUALA LUMPUR (July 19): Water supply company Ranhill Utilities Bhd announced that its subsidiary Ranhill Worley Sdn Bhd (RWSB) will be undertaking the scope of works for its related company in a Maleic Anhydride (MAn) refiner and briquetting plant project by Petronas Chemical Group Bhd (PetChem).

In a filing with Bursa Malaysia on Tuesday (July 19), Ranhill Utilities said that Perunding Ranhill Worley Sdn Bhd (PRW) — an engineering and design services provider for oil and gas facilities — was awarded a RM4 million contract from PetChem to perform front-end engineering design (FEED) for the MAn project.

Duration of work is eight months, commencing from the date of award on June 4.

Ranhill Utilities chairman and major shareholder Tan Sri Hamdan Mohamad is also the director and substantial shareholder of PRW.

Ranhill Utilities notes that the provision of engineering services by RWSB to PRW for the project is a recurrent related party transaction (RRPT), which, according to the company, “is in the ordinary course of business and are on terms not more favourable to Tan Sri Hamdan Mohamad”.

It is worth noting that PetChem is in the midst of acquiring a 113 kilo-tonnes per annum (ktpa) MAn plant located in Gebeng, Kuantan.

The MAn plant was previously shut down by BASF PETRONAS Chemicals Sdn Bhd (BPC), following a product portfolio realignment exercise that led to the permanent closure of its Butanediol and derivatives plant.

“With the acquisition, PetChem will repurpose the plant by rejuvenating and upgrading the facility to produce higher quality MAn that is better suited to the food and pharmaceutical industries,” Ranhill Utilities explained.

PetChem is currently performing a detailed assessment which is expected to be completed in the first quarter of 2023 and subject to final approval. The plant is targeted to be ready by the first half of 2025.

“The primary objective of the FEED package for this project is to design and develop the engineering to a level of detail sufficient to permit a final investment decision (FID) for the project,” Ranhill Utilities elaborates.

Ranhill Utilities saw its net profit increase by 1.1% to RM7.38 million in the first quarter ended March 31, 2022 (1Q FY22). The group’s earnings dropped 19% to RM30.58 million in the financial year ended Dec 31, 2021 (FY21), as compared to RM37.7 million a year ago.

Ranhill Utilities said the project is expected to contribute positively to the revenue and earnings of the company in FY22.

“This award reinforces PRW's and RWSB's positions as leading providers of engineering and design services of oil and gas facilities,” it said.

Over the past 12 months, shares of Ranhill Utilities had declined by 45% to its all-time low of 38.5 sen, giving it a market capitalisation of RM492.69 million.