Red chip BEWGM may invest RM2b in Johor water jobJuly 28, 2017
BEWG (M) Sdn Bhd (BEWGM), the Malaysian arm of China state-owned enterprise Beijing Enterprises Water Group Ltd (BEWG), will be proposing solutions for water resources to the Johor State Executive Council and if accepted, it will invest some RM2 billion to implement the water and sewage treatment services.
“BEWGM, together with its local partner Loyal Engineering Sdn Bhd, received the formal letter of mandate last week to do a detailed study for a comprehensive solution for water resources throughout Johor.
“We will take six months to do the study, then will submit our proposal to the state government.
“The state government will evaluate it and negotiate with us, and if it likes our proposal, BEWGM is ready to invest about RM2 billion for this project,” chief executive officer Datuk Vence Ong Kian Min told reporters after announcing the oversubscription of the company’s debut RM400 million sukuk here yesterday.
BEWG is listed on the main board of the Hong Kong Stock Exchange, and is itself a subsidiary of red chip stock Beijing Enterprises Holdings Ltd, which is controlled by the Beijing municipal government.
The Islamic medium-term notes (sukuk wakalah) carries a rating of AA from the Malaysian Rating Corporation Bhd. Proceeds from the sukuk issuance will partly finance the refurbishment and upgrading of a water treatment plant in Bukit Sah, Kemaman, where BEWGM is the design and build contractor.
BEWGM was awarded the design and build contract by the Terengganu state government in November 2015.
“The value of the Kemaman contract is RM687 million and is planned for completion in November 2018. The design stage and rectification works are done, and we are confident of finishing it on time,” Ong said.
Asked on why the company tapped the debt market two years after bagging the contract, BEWGM chief finance officer Mustakim Mat Nun explained: “We issued a sukuk because this is a deferred payment project, where the first three years (2015 to 2018) is funded by BEWGM, and from the fourth to ninth years (2018 to 2024), the state government will start paying us a fixed sum based on deliverables.”
Ong said the sukuk represents a number of firsts for BEWGM and the Malaysian sukuk market.
“This is BEWGM’s first-ever debt capital market instrument, the first ringgit-denominated sukuk by a China-owned company for water infrastructure funding, and the largest ringgit-denominated sukuk by a China-owned company to-date.
“The issuance has also enabled the Beijing Enterprises Group to diversify its funding sources in Malaysia, which had so far been limited to bank loans,” he noted.
Ong said the company had handed over the completed Pantai 2 sewage treatment plant yesterday morning after completing construction of the centralised wastewater treatment facility. The contract had been awarded by the Energy, Green Technology and Water Ministry in July 2011 and completed in July 2015.
Moving forward, he said BEWGM is in discussions for similar projects with the Sarawak state government as well as other state governments, though he declined to reveal them.
“Though BEWG has expertise with kitchen waste projects in China, BEWGM will only start looking at solid waste and sanitation projects two years from now,” Ong said.
This article first appeared in Malay Mail.