Tenaga Nasional Bhd has been selected by the Energy Commission as the preferred bidder to develop the 1,000MW coal-fired power plant in Manjung, Perak. Tenaga will now enter into negotiations in respect of the bid. The letter of award will be issued upon successful completion of the negotiations. The proposed power plant is expected to come online on 1 Oct 2017. (BMSB, Sun)
This is positive for Tenaga and within our expectations as it confirms speculation in June that Tenaga submitted the lowest bid. The win is also in line with our view that Tenaga, as Malaysia's national utility with a monopoly over the transmission and distribution assets in Peninsular Malaysia, would submit a competitive bid. Also, being backed by Khazanah we felt Tenaga's lower cost of capital would give it an added advantage. The win by Tenaga likely means 1MDB, the only other bidder, is now out of the running and this may impact 1MDB's plan to IPO its power assets.