PETALING JAYA: Malakoff Corp Bhd is in the final stages of discussion regarding its waste-to-energy (WtE) plant in Melaka.
According to TA Research, the WtE plant will be built next to the Sungai Udang sanitary landfill and will have a waste management capacity of 960 tonnes per day as well as installed power capacity of 22.1MW.
“The revenue source will be tipping fee payment (RM80 to RM100 per tonne) and sale of electricity (42 sen kilowatt hour) via a 21-year power purchase agreement.
“The equity internal rate of return (IRR) is estimated to be a high single digit, while project IRR is around the mid-single digit,” TA Research said in a report following a visit to Malakoff’s recycling facility in Putrajaya.
The WtE plant was awarded to Malakoff on a public-private partnership structure with a concession period of 34 years.
The project cost is around RM760mil and is expected to take three years to complete construction, testing and commissioning.
“Malakoff is hopeful of finalising the concession agreement by the first quarter of financial year 2024.
“Hence, we expect the WtE plant to provide positive but minor contributions to Malakoff’s bottom line from financial year 2027 onwards,” added the research house.
On the recycling facility, the research firm said it is a one-stop education centre on waste management.
Apart from being an information hub about recycling, the facility has a capacity of 300 tonnes to 400 tonnes of integrated recycling, a centre that buys recyclable goods, an anaerobic digestor that produces biogas and electricity from food wastes.
According to TA Research, Malakoff continues to explore opportunities in concession and non-concession business in the environmental solutions segment via unit Alam Flora Sdn Bhd.
Meanwhile, Kenanga Research said the total waste in Malaysia is forecast to grow to 19 million tonnes by 2050, from 14 million tonnes in 2021.
This has brought about new opportunities in the waste management sector, such as recycling, recovery and sustainable waste treatment as waste diversion in waste management solutions.
WtE project is one of the keys to waste management solutions to convert waste into energy and reduce reliance on fossil fuels, added Kenanga Research.
It said the National Solid Waste Management Department has planned to build 22 WtE plants throughout Malaysia.
Currently, four WTE plants are awarded for construction in Melaka, Selangor, Kuala Lumpur and Johor. Other WtE plants in the pipeline are Semeling in Kedah, Seelong in Johor and Jabor Kuantan, Pahang.
On Malakoff’s proposed acquisition of a 49% stake in waste management company, E-Idaman Sdn Bhd, Kenanga Research said it would not make a significant earnings impact in the near term.
However, it said the move indicated Malakoff’s efforts in looking for new earnings streams to replace its expiring power purchase agreements.
