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Mega First Not Extending Power Plant Pact In China
Last update: 17/10/2017
KUALA LUMPUR, Oct 17 (Bernama) -- Mega First Corp Bhd (MFCB) would not extend its Sino-foreign cooperative joint-venture agreement with Qixian Heat & Power Co Ltd (QHP) in relation to the power plant in China, which would expire on Oct 22, 2017.
In a filing to Bursa Malaysia today, MFCB said, the move was taken in view of the Chinese government's stricter environmental protection policies which aimed to reduce air, soil and water contamination.
"The tightening environmental protection policies had increased investment and production costs significantly. It has also substantially reduced steam demand.
"It would require significant capital investments to change, add, upgrade and or modify the existing plant and machinery," the company said, adding that it estimated that an additional 50 million Renminbi (RM31.97 million) would be spent by Dec 31, 2017 in order to comply with existing policies.
MFCB and QHP had formed a 60:40 joint-venture company, Shaoxing Mega Heat & Power Co Ltd (SMHP), to operate the power plant, and the expiry of agreement would result in the future loss of earnings contribution from SMHP.
SMHP contributed 34 per cent to the group's revenue in the 2016 financial year and accounted for 28 per cent of its revenue between January-June this year.
"However, the percentage contribution will likely be much lower in the second half of 2017," said MFCB, adding that the increase in profit recognition from the construction of its Don Sahong Hydropower project in Laos and better earnings from its resources division could offset the shortage.
-- BERNAMA |
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