9 people like this.

12 comment(s). Last comment by Gotyou 2022-06-02 20:37


305 posts

Posted by SomaCruz89 > 2022-05-31 10:13 | Report Abuse

Thanks DK for the sharing!


13,612 posts

Posted by i3lurker > 2022-05-31 21:08 | Report Abuse

This is so totally not the way it is calculated.

Powergen contracts are based on IRR .
This follows from US and western models which were then benchmarked to World Bank methods of drawing up contracts.
World Bank methods had become the defacto standard worldwide
and for Vietnam case its 10% IRR
10% IRR is based on approved capex by Vietnam which may or may not be same as per accounts capex shown in Jaks audited accounts.

all these are whatcamacallits
These are actually efficiency bases to make sure operator performs well to agreed standards before the 10% IRR are paid out.


13,612 posts

Posted by i3lurker > 2022-05-31 21:17 | Report Abuse

essentially whatever you do has no effect at all.
you will only get 10% IRR unless you screw up big time
thats where all these parameters like heat rate, up time, plant conversion efficiency are all methods used as incentives for plant operator to perform well.


13,612 posts

Posted by i3lurker > 2022-05-31 21:27 | Report Abuse

for simple layman understanding..

ass_u_me a block of coal has 100 units of energy
ass_u_me Vietnam contract says must achieve 32% efficiency
if you achieve less than 32% efficiency you will suffer penalties making your IRR less than 10%
if you achieve more than 32% efficiency you will enjoy incentives making your IRR more than 10%

the contract terms can vary between 32% to 42% depending on plant design and nego skill.
Typical China efficiency is 40.9%

do you feel lucky today?


485 posts

Posted by Just88 > 2022-05-31 21:27 | Report Abuse

Gotyou, Thank you for sharing DK's reply. I was having difficulty understanding you previous article but DK explanation helped a great deal. Thanks.


13,612 posts

Posted by i3lurker > 2022-05-31 21:38 | Report Abuse

different plants have totally different designs
different base efficiency per contract
example Plant A contract base efficiency is 32%
example Plant B contract base efficiency is 40%
and the heat path can be totally different.

basing your profits on another power plant means said person have totally no idea how power plant contracts are signed
and revenue generated.


485 posts

Posted by Just88 > 2022-05-31 22:02 | Report Abuse

It is not difficult to tell who is smart and who is just acting smart.


5,307 posts

Posted by Sslee > 2022-06-01 15:07 | Report Abuse

Jaks share of profit of JV quarter end 31 March RM 33,936,000. So per year will be RM 135,744,000.

From author: Note that Jaks' 30% sharing from JHDP capacity charges per annum alone is RM170m (565 x 30%) = EPS RM0.083

Jaks' 30% sharing from JHDP capacity charges per quarter 170/4= RM 42.5 million.
Thus Jaks management must have under report the quarter share of profit by RM (42.5-33.94) RM 8.56 million on capacity charge alone. So that about right the money must had gone to someone else pocket.


485 posts

Posted by Just88 > 2022-06-01 17:34 | Report Abuse

Sslee, could it be due to other reasons like technical problems with the power plant, high repair costs etc. Always so cynical ?


485 posts

Posted by Just88 > 2022-06-01 23:27 | Report Abuse

"Despite the increased contribution from its associate, we believe that there is still upside to this, given the spill-over of the maintenance charged during the quarter, while most of the work was completed in 4Q21" -- Affin


356 posts

Posted by liewtz06 > 2022-06-02 15:05 | Report Abuse

@Sslee, there was a fire incident in one of the 2 turbines from Q4 21.
Assume 1 turbine down for 1 month, then 34m/5*6 = 41m. Which is very close to DK's calculation.


35 posts

Posted by Gotyou > 2022-06-02 20:37 | Report Abuse

Liewtz, thanks for the information

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