KNM awards RM1.9bil job to China Western Power

KUALA LUMPUR: KNM Group Bhd’s unit in the United Kingdom, Peterborough Green Energy Ltd (PGE), has awarded a £346mil (RM1.9bil) contract to China Western Power Industrial Co Ltd to build an energy-fromwaste power plant.

PGE has signed an engineering, procurement, construction and commissioning (EPCC) contract with China Western Power and the project will be funded on a deferred payment scheme.

Group finance director Terence Tan said China Western Power would finance the construction of the plant for five years.

“It will be a substantial portion for the funding. They will fund almost the whole thing except for the equity portion. It is a bit sensitive in terms of percentage but it will be a substantial funding for us,” Tan said after the contract signing ceremony.

“They will not take an equity stake. We will still control 80% equity (of the power plant) and 20% will be from the UK,” said group CEO Lee Swee Eng.

“This EPCC contract is for the first phase of the project but it is double the size of what we have been talking about (before). Previously, it was 18MW but now, it is more,” he added.

The EPCC will see the construction of a net 36MW waste power plant for its PGE Project in the UK for a period of 37 months. Construction is expected to commence in the first quarter of 2018.

China Western Power is incorporated in the UK and listed on the Shenzen Stock Exchange. It is involved in manufacturing and exporting large-scale boilers and auxillary equipment.

China Western Power is an EPCC service provider for energy and power stations. It also has investments in waste treatment facilities in China.

“Actually, China Western Power as a company is quite similar to KNM – it is a manufacturer and contractor. The only difference is that it is much bigger than KNM and is cash rich,” Lee said.

“So I think the strategic partnership is not only limited to this project but also the second phase, which we will give them the first right of refusal.

“There is also potential partnerships between us in Europe in renewable energy sector,” he added.

Once the Peterborough Green Energy plant is completed, KNM would see most of its income coming from a recurring base.

“We are transforming. When the UK project starts, we will derive 70% of our revenue from recurring income,” Lee said.

The company’s orderbook currently stands at RM2bil to RM2.5bil, which will keep it busy for up to two years.