KUCHING: Reneuco Bhd (formerly known as KPower Bhd) and Citaglobal Bhd will set up a special purpose vehicle to undertake the development of an independent and renewable power production facilities for the East Coast Rail Link (ECRL) project’s network (ECRL IPP project).
Reneuco has entered into a consortium agreement with Citaglobal (formerly known as WZ Satu Bhd) to formalise the collaboration between the parties via a new special purpose vehicle to be incorporated under the proposed name of “Citaglobal Reneuco ECRL Energy Solutions Sdn Bhd (Consortium SPV Company) to undertake the ECRL IPP project.
To recap, Reneuco announced on Dec 21, 2022 that a 50:50 consortium comprising Reneuco and Citaglobal had received and accepted a letter of intent from Malaysia Rail Link Sdn Bhd (MRL) to engage the consortium for the planning, design, financing, development, construction, installation, completion, commissioning and operation of the ECRL IPP project.
“The Consortium SPV Company aims to finalise the contract award with MRL for the ECRL IPP project soonest possible,” Reneuco said in a filing with Bursa Malaysia.
ECRL project is a 665 km railway link connecting different parts of the east coast region with the west coast region in Peninsular Malaysia. ECRL connects state capitals, major urban centres, industrial hubs, ports, airports and tourism zones and it interchanges with existing railway lines in Peninsular Malaysia.
The ECRL project is poised to help boost Malaysia’s economy and is also part of the East Coast Economic Region Masterplan to achieve equitable growth and development between the east and west coasts of Peninsular Malaysia.
MRL, an entity of the Finance Ministry, is developing the ECRL project and will operate it in a 50:50 joint venture with China Communications Construction Company.
The Transport Ministry, through Agensi Pengangkutan Awam Darat (APAD) will supervise and regulate the ECRL project. On the salient terms of the consortium agreement, Reneuco said the initial share capital of the Consortium SPV Company shall be RM500,000, which Citaglobal shall contribute RM300,000 (60 per cent) and Reneuco RM200,000 (40 per cent) .
Reneuco said it will fund the subscription of its portion of the initial share capital in the Consortium SPV Company through internally generated fund and/or bank borrowings.
The Consortium SPV Company shall carry out all activities in relation to the implementation of the ECRL IPP project through the ECRL IPP Company.
“Any funding requirements of the Consortium SPV Company for the business shall be met based on respective shareholders’ shareholding equity in the following manner of priority or such other manner as the shareholders may agree to: Firstly, via capital injection on the basis of at least, in aggregate, 20 per cent in the form of equity and/or shareholders’ advances or loans for the project financing of the ECRL IPP project; Secondly, through external borrowings from banks or financial institutions; and Thirdly, via internally available funds of the Consortium SPV Company,” said Reneuco.
Reneuco said the consortium agreed that the overall management of all activities in relation to the development of the ECRL IPP project through the ECRL IPP company shall be led by a project director to be nominated by Citaglobal.
Citaglobal will also nominate a financial controller to take charge of the management of the finance matters during the project development phase as well as nominate candidates for the appointment of the overall technical consultant, legal advisor and financial advisor.
According to Reneuco, under the consortium joint venture, the company and its subsidiaries will be well-positioned to expand its business activities under the sustainability energy and utilities segment.
