KUCHING: Tenanga Nasional Bhd’s (TNB) plan expand the dry bulk terminal in Lumut has been viewed positively by analysts as the move could ensure a sustainable coal supply for the power company.
In a report, the research arm of AmInvestment Bank Bhd (AmInvestment Bank) said it is positive on the expansion plan as it would ensure sustainable coal supply to cater to TNB’s generation needs.
It maintained a ‘buy’ call on TNB as it believed electricity demand would remain strong in the second half (2H) given the dry spell in April to May and the peak demand achieved in recent months.
According to a news report, TNB said it might invest RM700 million to triple the terminal’s coal handling capacity to 30 million metric tonne (MT) annually from circa 10 million MT currently.
It added that prospective contractors can be part of a consortium or a joint venture (JV).
“The investment is part of TNB’s long-term plan expansion plan that includes upgrading its coal handling facilities. Currently, TNB imports coal through three discharge points – Lumut Port, Jimah power plant, and Tanjung Bin power plant.
“We are not surprised with the news as it follows our recent visit to the dry bulk terminal, when management noted of plans to expand the port. Plans include lengthening the jetty, building a blending facility as well as converting existing land at the site into a coal stockyard for the nation,” it said.
Currently the terminal – which could handle Capesize vessel with 170,000 DWT – mainly supplies coal to the Janamanjung power complex (3,110MW) nearby.
“The complex (four plants currently operating) supplies 25 per cent of Peninsular Malaysia’s total electricity requirement,” it said.
“Management said that the expansion would allow it store one million MT of coal on the stockyard, which may serve as feedstock for other power plants nationwide. There are also plans for the port to serve as a redistribution centre to sell coal to other countries.
“Hence, it is also considering the investment of a blending facility to blend coal of different calorific values – a move that may be critical due to the shortage of quality coal globally.
“This is currently in the conceptual stage and may cost RM90 million. Currently, there are no blending facilities in Malaysia.
“All in, management is targeting to get approval for its expansion proposal by year-end. The expansion is expected to be completed by 2019 to 2020,” the research report said.