Khazanah forms JV to invest in China projects

BY AJP -- Kuala Lumpur: Khazanah Nasional Bhd has formed a joint venture (JV) with Beijing China Sciences General Energy & Environment Co Ltd (BCSGEE) to develop municipal waste-to-energy (WTE) projects in China.

The JV was established via Khazanahs wholly-owned subsidiary, Tanjung Rhu Investments Ltd, which will have majority shareholding.

Under the JV, Khazanah is committed to invest up to US$150 million in at least eight WTE projects over the next three years.

Commenting on the investment, Khazanahs managing director, Tan Sri Azman Mokhtar said that the JV was a landmark transaction for Khazanahs investments in China and in the sustainable development and renewable energy sector.

"We are excited as this investment is another milestone in Khazanahs China coverage after opening our Beijing representative office in May this year," he said in a statement Friday.

"This transaction allows us to re-invest part of the profits weve realised from our investments in China," he said, referring to Khazanahs success in raising US$647 million in March this year through an issuance of exchangeable Sukuk and a placement of shares of Parkson Retail Group Ltd., monetizing its first China investment at 920 percent of cost. He said the JV was also Khazanahs first investment in the sustainable development sector, a growth sector not just in China but worldwide.

The global sustainable development sector, in particular alternative energy, is booming with sector investment growth of approximately 40 percent year-on-year, he said.

"For a major developing nation like China, the need to meet its thirst for energy while minimising environment pollution is of paramount importance and a fine balance.

"Hence, it is very timely that the Chinese government offers preferential electricity tariff and tax breaks for WTE projects, as they allow energy recovery while reducing environmental pollution caused by municipal waste," said Azman.

China has announced it is aiming to invest a total of CNY2 trillion (US$293 billion) by 2020 to achieve the country's Middle and Long-term Development Plan for Renewable Energy which includes objectives of increasing the proportion of renewable energy in the total energy consumption and promoting the commercial development of renewable energy technology such as hydro, biomass (including municipal waste), wind and solar.

By 2020, renewable energy is targeted to account for 15 percent of China's total primary energy consumption from eight percent today, while power generation from municipal waste sources is targeted to increase to 3,000 MW from approximately 200 MW currently, an increase of 15 times.

"We are targeting to invest up to US$150 million in eight to 10 projects over the next three years. We are in the process of completing the acquisition of a project with 800 tonnes per day installed capacity and are already working on three or four others in the pipeline," said Azman.

The investment is part of efforts under Khazanahs mandate to invest strategically in both domestic and regional markets.