Petronas Gas will be the winner in the "reimagined" talks between first-generation Independent Power Producers (IPPs) with the Energy, Green Technology and Water Ministry, says a research firm.
OSK Investment Research said the outcome would be Petronas Gas' transporting gas business model would continue even as the domestic gas supply in Peninsular Malaysia declined.
"As such, we maintain a "Buy call" for Petronas Gas, with fair value unchanged at RM13.52," said the research house in a statement.
It was responding to a newsreport in StarBiz tFriday, quoting a source as saying the Energy, Green Technology and Water Ministry has begun fresh talks with the country's first-generation IPPs after a couple of failed attempts and a long hiatus, to convince the IPPs to compromise and "give back a little to the system" and in return, be "rewarded" by extending their concessions upon expiry in 2014-15.
The report said the government felt that there must be some degree of compromise from the IPPs as their concessions are expiring soon and they should be willing to work with the system. The government has given the ministry a deadline of year-end to reach an agreement with the players, the report said.
There are five first-generation power purchase agreements (PPAs) that were signed in 1993 that were binding for 21 years.
The IPPs are YTL Power Generation Sdn Bhd, Genting Sanyen Power Sdn Bhd, Segari Energy Ventures Sdn Bhd, Powertek Bhd and Port Dickson Power Sdn Bhd.
OSK Investment Research said it was learnt that the Energy Commission would take the lead in individual negotiations with the IPPs and it would be up to the IPPs to propose how much capacity tariff cut they could accept in exchange for an extension to their PPAs.
"The negotiations are limited to first-generation IPPs and will be generally neutral to the IPPs and Tenaga. "Instead, any savings Tenaga gets from the IPP capacity charges, they will be used to secure a long-term natural gas supply from Petronas at market price.
"This will in turn allow Petronas to build a liquefied natural gas (LNG) floating regasification terminal in Melaka and import LNG at market prices.
-- BERNAMA
