Gamuda earmarks RM2b for RE investments over next 5 years

PETALING JAYA: Gamuda Bhd has allocated RM2 billion for investment in renewable energy (RE) over the next five years to capitalise on the growing opportunities in the sector.

Group managing director Datuk Lin Yun Ling said the group does not need to raise funds externally for the RM2 billion as it has almost zero gearing and, given its assets base, it can borrow up to RM7-8 billion, and a gearing limit of 70% of its net assets.

Lin said its RE plans reach beyond the Malaysian border. For example, Gamuda is also looking at the Australian market in the coming years.

“Australia is a key market for Gamuda. We are bidding to develop hydro pump projects in Tasmania. We are also in advanced discussions on other large-scale RE assets,” he told a press conference after its AGM today.

Alternate director to Datuk Ha Tiing Tai as well as Gamuda Engineering managing director Justin Chin Jing Ho said that after the end of the five years (after the financial year 2027), the group can expect to see a triple-digit contribution to the bottom line from the RE segment.

“In the short term, the earnings contribution will only be in the tens of millions, because part of the ERS deal involves the acquisition of some recurring income assets that contribute to our bottom line in the short term.

“But the big investments are on a longer scale. Solar can finish in two years but hydro will take five to six years of development,” he said.

The group on Wednesday announced a plan to acquire a 30% equity interest in ERS Energy Sdn Bhd, a solar energy engineering procurement construction and commissioning firm, for RM200 million. This deal is a step to fast-track its large-scale RE plans.

Currently, ERS has an RM1.4 billion order book which contributes to Gamuda’s FY23 and FY24 value projections.

Chin said the key value Gamuda sees in the acquisition is that ERS has secured an early quota to develop a power plant under the New Enhanced Dispatch Agreement.

“This framework will form the base for the Corporate Green Power Programme announced recently by the government. There is a 600-megawatt quota announced not long ago and the tendering process is open now.

“This will be a key first step in the liberalisation of the energy market, allowing more injection of renewables into the grid, a higher uptake of renewables and all the other associated transitions that go with it such as energy storage, smart grids and associated infrastructure,” he explained.

Separately, in a filing with Bursa Malaysia, Gamuda announced the retirement of its independent and non-executive chairman Datuk Mohammed Che Hussain, effective today.