Mukah Power to Issue Sukuk Mudharabah for 100% Financing of Power Plant

Kuching, 2 October 2006: RHB ISLAMIC Bank Berhad (RHB ISLAMIC) has successfully structured and lead arranged highly innovative sukuk issuances for Mukah Power Generation Sdn Bhd (MPG) and Sarawak Power Generation Sdn Bhd (SPG), in relation to the Mukah power plant project. Both MPG and SPG are wholly-owned subsidiaries of Sarawak Enterprise Corporation Berhad (SECB).

MPG is currently undertaking the construction of a 2x135 megawatt (MW) total installed capacity coal-fired power plant, comprising two boiler turbine generator units, each unit with a nominal 135 MW capacity, in Mukah, Sarawak.

The Mukah Power Plant project, which is scheduled for completion in the 4 th quarter of 2008, is for the sole purpose of generating electricity for sale to Syarikat SESCO Berhad (SESC0), which is principally involved in the generation, transmission, distribution and sales of electricity in Sarawak. Using the large coal deposits from nearby coal-fields in the Mukah-Balingian region, the Mukah power plant will be the third coal-fired power plant in Sarawak, after the up-and-running 110 MW Sejingkat Power Plant (phase 2). The Sejingkat Power Plant is located on the outskirts of Kuching and is 100% owned by SECB and SESCO. Upon completion, the Mukah power plant will be the largest power plant in the State, and it is expected to provide approximately15% of Sarawak’s power needs. 

MPG and SPG senior officials today signed financing agreements with RHB ISLAMIC, formalising the issuances of up to RM950 million Sukuk Mudharabah and up to RM215 million Sukuk Musyarakah for the Mukah Power Plant project, by MPG and SPG respectively.

The two Sukuk programmes, structured along the true blue Syariah principles of Mudharabah and Musyarakah, are the first of its kind being used in a project financing transaction and represent the country’s big step toward convergence to the Middle East syariah standards in Islamic financing. The Sukuk programmes, which provide an almost 100% financing to the Mukah power project, with a paid-up capital of RM2 million, would be fully acceptable to the Middle East market.

The signing ceremony was witnessed by the YAB Pehin Sri Haji Abdul Taib Mahmud , the Chief Minister of Sarawak .

Signing on behalf of MPG and SPG was its Chairman, Datuk Amar Haji Abdul Aziz Bin Dato Haji Husain (Datuk Amar Haji Abdul Aziz) and Mr Khalid Bhaimia, CEO of RHB ISLAMIC Bank signed on behalf of the Bank.

Proceeds from the RM950 million Sukuk Mudharabah issuance will be utilised to part repay shareholder’s advances and part finance project development cost, and a portion of the proceeds will be set aside to meet contingent requirements in the event of project cost overrun and completion delay. Proceeds from the RM215 million Sukuk Musyarakah will be used to subscribe to the Junior Sukuk to be issued by MPG.

With the excellent support from the Sarawak State Government, the construction of the Mukah Power Plant is expected to contribute tremendously towards addressing the increasing electricity demand in Sarawak.