PETALING JAYA: JAKS Resources Bhd has received confirmation from Vietnamese authorities that the first unit of its build-operate-transfer (BOT) thermal power plant in Hai Duong province commenced operations on Nov 24.
The second unit is scheduled for completion in the second quarter of 2021.
JAKS Resources CEO Andy Ang Lam Poah said the completion of the whole power plant t is expected to generate revenue annually over the next 25 years.
“This augurs well for JAKS as we can now reap in the benefits of the recurring stable income in the long run, starting with the first unit achieving its commercial operational status. Going forward, in light of the region’s huge appetite for energy, we are absolute that our renewable energy prospects will be very bright,” he said.
The power plant comprises two 600MW coal-fired thermal units with a project cost of US$1.87 billion. JAKS initially obtained the concession and subsequently formed a joint venture with China Power Engineering Consulting Group Co Ltd (CPECC) to build and operate the power plant.
JAKS holds a 30% equity interest in this joint venture with CPECC holding the remainder.
Under the power purchase agreeement, the joint-venture company, namely JAKS Hai Duong Power Co Ltd, will be guaranteed with fixed capacity payments by the Vietnamese government and will be backed by energy payment to cover variable costs, including fuel and variable operating costs, and therefore contributing to a sustainable income contribution during the 25-year tenure.
The recurring income from JAKS Hai Duong Power Co, which is readily convertible into US dollars, bodes well for JAKS as it helps to hedge its earnings against foreign currencies’ fluctuations when the group widens its operational footprint in Southeast Asia, where potential income will be based on different currencies.
Ang said the group will be on the lookout for opportunities in renewable energy-related projects in Southeast Asia and will focus on expanding the power division, particularly solar and hydropower projects, in Vietnam and Malaysia.
