KUALA LUMPUR (June 6): Energy services firm Kinergy Advancement Bhd (KL:KAB) said on Thursday that it is acquiring an Indonesian company for RM8.89 million to build a 4.26-megawatt biogas plant in Aceh.

KAB’s unit KAB Energy Holdings Sdn Bhd signed a term sheet with Green Energy Specialist Pte Ltd of Singapore to acquire the entire equity interest in PT Green Energy Specialist One Tbk (PT Geso), the company said in an exchange filing. The proposed acquisition includes exclusivity over a 6.5-hectare land where the plant will be built.

KAB, formerly known as Kejuruteraan Asastera Bhd, said PT Geso has already secured a power purchase agreement with Indonesia's state electricity company PT Perusahaan Listrik Negara Tbk, which will last for a duration of 25 years from the commercial operation date.

The initiative follows KAB's initial venture into Indonesia with a mini-hydroplant in North Sumatra as the company seeks a diversified energy portfolio generating a stream of recurring revenue.

The proposed acquisition of PT Geso also includes exclusive agreement with four palm oil millers for their effluent, securing a consistent supply of raw materials essential for biogas production before the formal acquisition.

Empty fruit bunches from oil palm trees is a byproduct waste from mills that is typically not utilised.

"The acquisition of the Aceh biogas plant is a strategic move that aligns perfectly with our growth plan in the realm of sustainable energy," KAB executive deputy chairman cum group managing director Datuk Lai Keng Onn said in a separate statement.

Indonesia, as the world’s largest producer of palm oil, “presents a compelling choice for this development, with abundant feedstock available for biogas production," he noted.

Upon completion by the first quarter of 2025, Lai said the Aceh biogas plant will be another recurring revenue generator for KAB.

In the first quarter ended March 31, 2024 (1QFY2024), KAB's net profit doubled to RM4.97 million from RM2.43 million a year earlier, thanks to new projects and entities acquired. Revenue, however, declined 1.7% year-on-year to RM42.04 million from RM42.76 million due to the completion of some engineering projects.

Kinergy previously said that it will focus on expanding its energy solutions and customer base in the energy sector, replenishing its order book and venturing into neighbouring Asean countries. Order book balance totalled RM942 million at end-March, up from RM939 million at the end of December 2023.

At 4.24pm, shares of KAB were down half a sen or 1.35% at 36.5 sen, valuing the group at RM725.05 million. Year-to-date, the counter has lost 8.75%.