Mega First: PPA with Sabah Electricity yet to be renewed

PETALING JAYA: Mega First Corp Bhd (MFCB) said there is a possibility that it has to stop supplying energy from its Sabah plant to Sabah Electricity Sdn Bhd because the power purchase agreement (PPA), which will expire on Dec 2, 2017, has yet to be renewed.

The group said while the Energy Commission has proposed new commercial terms for the PPA’s extension, it is subject to the approvals of the Minister of Energy, Green Technology and Water and Sabah Electricity’s board, and the execution of a new PPA between Sabah Electricity and Serudong Power Sdn Bhd, MFCB’s 51% owned subsidiary.

“While the MFCB board remains optimistic the PPA will be extended, the aforesaid approvals and the subsequent extension agreement are unlikely to be obtained and inked respectively before the expiry date of the existing PPA,” MFCB told the stock exchange yesterday.

It added that in the absence of any eleventh hour interim arrangement with Sabah Electricity, Serudong Power will have to stop supplying energy on Dec 2, 2017 until such time the PPA extension is executed.

Earnings contribution from Serudong Power in the final quarter will be adversely affected if it stops supplying energy on Dec 2, and for the rest of the month.

MFCB reportedly began talks for the renewal of the 21-year PPA as early as 2015.

The group posted a 35% jump in net profit to RM116.8 million for the nine months ended Sept 30, 2017 on higher recognition of construction profit of RM127.1 million (2016: RM64.3 million), improved contribution from the resources division and higher forex gain.

The group’s share price gained three sen to RM3.50 yesterday, with 61,300 shares traded.