Permaju inks solar deal, eyes triple-digit revenue growth

By Sharen Kaur - Published in New Straits Times, September 5, 2019 

Permaju, which is listed on Bursa Malaysia’s Main Market, is expected to invest between RM350 million and RM400 million to develop a solar energy generation facility in Negri Sembilan. NST file pix

KUALA LUMPUR: Sabah-based Permaju Industries Bhd has forayed into solar power generation business in a move to increase revenue by triple-digit growth, people with knowledge on the matter said.

Permaju, which is listed on Bursa Malaysia’s Main Market, is expected to invest between RM350 million and RM400 million to develop a solar energy generation facility in Negri Sembilan.

It is understood that Permaju has partnered Vsolar Group Bhd, an ACE Market-listed renewable energy and photovoltaic (PV) energy generation firm, for its maiden venture into solar.

Permaju, through its wholly-owned subsidiary Genbayu Gemilang Sdn Bhd signed a collaboration and alliance agreement with Vsolar Group's unit Solar Interactive Sdn Bhd on September 4.

The agreement entails the development of the solar facility, including a Large Scale Solar (LSS) PV plant on 121.4 hectares of land owned by Genbayu in Setul, Seremban.

Sources close to Permaju said that Genbayu and Solar Interactive would establish a joint venture company to develop the solar facility with a capacity of 90 megawatts (MW).

"Permaju and Vsolar are each targeting triple-digit revenue growth a year from this venture. Their bottomline is expected to improve," said the sources.

Permaju, through its automotive division, is involved in the distribution of Volkswagen and Ford franchises.

The group is also involved in property development activities.

For the 12 months ended March 31 2019, Permaju revenues totaled RM62.6 million, with a net loss of RM997,000.

VSolar recorded a net loss of RM1.22 million for the cumulative nine months ended March 31, 2019, despite revenue growing 22.17 per cent to RM1.28 million.

Sources said the solar facility would initially have 117MW PV panel, with capacity to produce about 400Wp solar panel products (about 293,000 pieces) and there is potential to expand.

"The energy will be sold to Tenaga Nasional Bhd under a power purchase agreement to be signed at a later stage. Both the companies estimate the project return on investment will take around nine years."

LSS, best known as a solar farm, can generate anywhere from hundreds of kilowatts to thousands of megawatts of solar power.

LSS typically use solar PV technology to generate electricity from fields of solar PV panels.

The solar panels convert the energy from sunlight into direct current (DC) electricity, then inverters convert the power into alternating current (AC) that can be integrated into the electricity grid.

The sources said the solar facility will be subject to a definitive feasibility study, available financing and availability of feed in quotas from the relevant authorities.

Solar Interactive will procure engineering and construction services in addition to the procurement of financing for the development of the solar facility.