The Government has awarded a short-term extension to a few independent power producers (IPPs) through a competitive bidding process, said Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili. Ongkili said the rates are very competitive but were not disclosed. He disclosed that extensions were given to YTL Power for two years and 10 months (Mar16 to Dec18) with a capacity of 585MW, 1MDB’s Powertek Bhd for three years and 10 months (Mar16 to Dec19) with a capacity of 434MW and Malakoff’s Port Dickson Power Sdn Bhd for three years (Jan16 to Jan19) with a capacity of 436MW. (Source: Starbiz)

Comment: While the news is positive for both YTL Power and Malakoff, the market had already largely anticipated that the companies would receive an extension. The impact to YTL Power is limited as its domestic power generation business contributes c.10% to group PBT. Besides that, Port Dickson Power’s contribution to Malakoff is also small as it comprises only 8% of Malakoff’s effective power generation capacity in Malaysia.

Source: Affin Hwang Capital Research - 8 Oct 2015