Gas Malaysia diversifies into energy business

SHAH ALAM (Feb 25, 2014): Natural gas distributor Gas Malaysia Bhd will expand into the energy business by teaming up with Tokyo Gas' Energy Advance Co Ltd to provide electricity and steam through a combined heat and power (CHP) system to industries in Malaysia.
Gas Malaysia said the joint venture is in line with its overall strategy of maintaining its key position to be an innovative value added energy solution provider.
"The JV company will diversify Gas Malaysia's business from gas distribution to energy business," it told Bursa Malaysia yesterday.
Gas Malaysia will lead a 66:34 JV together with Tokyo Gas Co Ltd's subsidiary, Energy Advance Co Ltd (ENAC), to develop and operate the CHP system.
Gas Malaysia CEO Datuk Syed Faisal Albar said at least one plant will be built within two years and the company has identified suitable customers in the northern and central region.
The CHP system will allow local industrial customers to better manage the utilisation of their energy requirement thereby reducing carbon emission and overall energy cost by 20%.
ENAC is linked to Tokyo Gas, which is a related party in the JV as its subsidiary Tokyo Gas-Mitsui & Co Holdings Sdn Bhd owns 18.5% of Gas Malaysia.
At the same time, Gas Malaysia also entered into another JV with IEV Energy Sdn Bhd (IEV) to undertake the compressed natural gas (CNG) distribution system for areas that are not accessible by gas pipeline in Peninsular Malaysia.
The JV will be involved in the sale, supply and transport of compressed natural gas to potential customers.
The group will spearhead a 75:25% JV together with IEV Group Holdings Ltd's IEV to extend gas supply availability. IEV Energy is a member of IEV Holdings limited, a public listed company on the Catalist Board of the Singapore Exchange
For the CNG system, also known as virtual pipeline, the group will build a mother station at Gebeng, Pahang, with an initial cost of RM15 million, he said.
The station is expected to transfer some 300,000 mmbtu (million British thermal units) of CNG to its end users in a year, said Syed Faisal, adding that the CNG will be transported by trucks.
"We have identified seven companies in Gebeng, Temerloh and Mentakap," he said.
Syed Faisal said the CNG business segment is expected to make financial contribution to the group in a year from now, while the CHP business segment will contribute two years later.
"The industry is facing a lot of challenges. Partnership and relationship are more important than ever. We should capitalise each other strengths without taking each other for granted," he told the press conference after the signing ceremony here yesterday.
Asked about Gas Malaysia's total investment cost for the new business ventures, Syed Faisal Albar said the group has yet to finalise the capital expenditure numbers as it also depends on the customer demand.
He however said Gas Malaysia has sufficient financial capability to undertake these projects, as the group is now debt-free with a net cash position of some RM300 million.