News Room - Business/Economics

Jaks Resources Bhd has signed a joint venture agreement with China Power Engineering Consulting Group Co Ltd to develop a 1,200 MW Thermal Power Plant in Hai Duong Province, Vietnam, worth RM7.05 billion or US$1.87 billion.

The power plant is a 25-year build-operate-transfer (BOT) contract.

The project is Jaks' maiden foray into the power generation sector to generate stable and recurrent concession-type earnings in the longer term said Chief Executive Officer Andy Ang Lam Poah.

"The project will be funded on an intended capital structure of approximately 75 per cent and 25 per cent equity.

"The construction of the power plant, which will comprise two 600 MW generating units, is scheduled to begin in the first half of next year and commence commercial operations in 2020," he told reporters after a signing ceremony here Monday.

He said its unit, Jaks Power Holdings Bhd, would plough in RM528.81 million while China Power would invest RM1.2 billion in the joint venture company, which would build the two power plants.

Ang said once the project got underway, Jaks would be able to recognise additional revenue in four years.

He said upon expiry of the 25-year term, Jaks would transfer the power facility together with the attached assets at no charge back to the Vietnam government.

Jaks also entered into a power purchase agreement with Vietnam Electricity for the purpose of generation and supply of electricity for 25 years.

And, it also signed a coal supply agreement with Vietnam National Coal-Mineral Industries Group for the duration of the BOT period.

To recap, Jaks received the investment certificate from the Ministry of Planning and Investment of Vietnam for the design, engineering, procurement, construction, financing and operation of the power plant project under the BOT contract which was executed on Aug 26, 2011.

Jaks, primarily engaged in the integrated water works industry, is also involved in the design and construction of sewerage treatment facilities, as well as, manufacturing of mild steel pipes and other steel products.