UPDATE 1-Malaysia's Tenaga to invest $4.5 bln to fast-track energy transition

(Reuters) -Malaysian utility Tenaga Nasional Bhd (TNB) aims for capital expenditure of about 20 billion ringgit ($4.48 billion) annually over the next 28 years to fast track its energy transition plans, the company said on Wednesday.

FILE PHOTO: The logo of Tenaga Nasional Bhd is seen at its office in Kuala Lumpur December 3, 2013. REUTERS/Samsul Said

The investments will help Tenaga reach net zero emissions by 2050 and “open opportunities in more than doubling its earnings before interest and taxes (EBIT)”, Baharin Din, its president and chief executive, said in a statement.

Tenaga, in which sovereign wealth fund Khazanah Nasional is the biggest shareholder, aims to grab a bigger share of a clean energy market it estimates to be worth between 65 billion ringgit and 80 billion ringgit in Malaysia by 2050.

The company targets to have its power generation unit TNB Genco account for 40 billion ringgit of that, the company said this month.

Last week Reuters reported that Tenaga planned to begin the process next year for a potential $1 billion listing of the unit, citing sources close to the matter.

On Wednesday, analysts said they expected TNB Genco to be listed in two to three years.

“This will give time for Genco to grow its earnings,” AmInvestment Bank’s analyst Gan Huey Ling wrote in a note following Tenaga’s presentation.

Baharin said, “TNB’s decarbonisation plan will increase the enterprise value of Genco for the possibility of an initial public offering.”

The company is also exploring gas and hydropower projects in Southeast Asia, with a target capacity of 800 megawatts by 2050, he added.

Its new energy division will expand its renewable portfolio by targeting capacity of 14.3 gigawatts by 2050 with an equity investment of $7 billion, Baharin said.

The unit will grow its solar and wind investments in existing markets in Malaysia and Britain, and new markets such as Spain and Vietnam, he added.

Tenaga will also invest 90 million ringgit over the next three years on projects to spur domestic adoption of electric vehicles (EV), Baharin said.

The company is targeting 500,000 cars by 2030, bringing in annual electricity revenue of 1.25 billion ringgit, he added.

($1=4.4630 ringgit)

Reporting by Rhea Binoy in Bengaluru and Yantoultra Ngui in Singapore; Editing by Uttaresh.V and Clarence Fernandez

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