Tadmax Resources unaware of RM3.5b IPP termination

The future of its plant is now in doubt and could join the list of other casualties post-GE14

By MARK RAO

Tadmax Resources Bhd has not received any termination notice from the federal government on the RM3.5 billion Pulau Indah independent power plant (IPP), as media reports suggest the project has been scrapped.

“Tadmax is not aware of this alleged development. Further, Tadmax wishes to notify that to date, it has complied with all the requirements of all relevant government agencies and has not received any notifications of termination,” it said in a filing to Bursa Malaysia yesterday.

This was in response to media reports which claimed that Tadmax’s IPP contract for the 1,000MW-1,200MW power plant in Pulau Indah was terminated by the government.

“Tadmax is of the opinion that the article has no basis. Tadmax will make the appropriate announcement for immediate public release in a timely manner, upon further material development on the power plant project,” Tadmax noted.

The company had suspended trading of its shares yesterday in light of the recent reports surrounding the Pulau Indah project.

Tadmax shares last closed one sen higher at 29 sen last Friday with 2.78 million shares exchanging hands.

Reports of the project’s cancellation came after the Pakatan Harapan government terminated four other IPP contracts over the past six months since May last year.

Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin announced in July last year that IPP contracts approved through direct negotiations by the previous government would be cancelled and re-opened for competitive bidding.

Tadmax’s IPP award for a gas-fired power plant in Pulau Indah in August 2016 drew criticism at the time due to the company’s lack of experience and expertise in the power generation industry.

The firm’s high debt then also caused concerns, that the company might fail to fund the large-scale and extensive project.

Tadmax initially invited Tenaga Nasional Bhd (TNB) to participate in the power plant, but the latter declined the offer in May 2017. The company then brought in South Korea’s state-owned utility firm Korea Electric Power Corp (Kepco) as its technical partner in the same year, as well as Selangor state-linked entity Worldwide Holdings Bhd.

Under the agreement, Tadmax would be the largest shareholder in the project with a 40% stake, followed by Worldwide and Kepco holding 35% and 25% respectively.

Commercial operations for the Pulau Indah plant were initially scheduled for Jan 1, 2023, and the power generated from the plant was to be sold to TNB via a power purchase agreement.

The future of the RM3.5 billion plant is now in doubt and could join the list of other casualties since the 14th General Election (GE14) — Malakoff Corp Bhd and TNB’s 700MW gas-powered plant in Kapar, Selangor; Aman Majestic Sdn Bhd and TNB’s 1,400MW plant in Paka, Terengganu; Sabah Development Energy (Sandakan) Sdn Bhd and SM Hydro Energy Sdn Bhd’s hydropower plant in Sandakan, Sabah; and Edra Power Holdings Sdn Bhd’s 400MW quota for the construction of a solar-powered plant.

The termination of the four IPPs was touted to have helped the government save RM1.26 billion in electricity cost to consumers.