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Wednesday, July 24, 2013

Petronas licence suspension is no laughing matter

PETALING JAYA: A subsidiary of Ranhill Energy andResources Bhd has had its Petronas licence suspended indefinitely, putting a snag in the group’s RM753mil initial public offering (IPO) slated for next Wednesday.
According to a document sighted by StarBiz, Perunding Ranhill Worley Sdn Bhd’s (RWorley) licence has been suspended “for an indefinite period” effective July 17.
“The suspension covers both upstream and downstream,” it read.
The document said RWorley “shall not at any time and for any reasons whatsoever be allowed to make any reference to and/or utilise its Petronas licence (whether in whole or part thereof) in any of its future dealings with any party”.
Additionally, RWorley and/or any persons connected to it would no longer qualify or be allowed to participate in any of Petronas’ tenders.
The document went on to say that ongoing tenders which were to be awarded to RWorley would be passed on to the next recommended bidder after negotiations, while existing contracts would continue until they are completed.
“For umbrella contracts, no new work orders shall be issued,” the letter read.
Ranhill Energy has a 51% stake in RWorley, its joint venture with Australia-listed WorleyParsons Ltd, an engineering services firm.
Insiders believe the suspension was linked to work done onPetronas Gas Bhd’s liquefied natural gas (LNG) regasification plant in Malacca.
RWorley won the RM1.07bil job in January 2011 in a consortium with Muhibbah Engineering (M) Bhd. The project involved engineering, procurement, construction, installation and commissioning works.
Industry sources confirmed that the regulators and bankers were looking into whether Ranhill Energy, controlled by Malaysia’s “water baron” Tan Sri Hamdan Mohamad, was in breach of any disclosure rules related to the licence suspension.
The IPO was billed as Ranhill Energy’s comeback after it was privatised in 2011 at 90 sen a share, or RM538mil.
The listing – which saw the emergence of big-name cornerstone investors such as Lembaga Tabung Haji,Eastspring Investments BhdHwang Investment Management Bhd and Corston Smith Asset Management Bhd – drew attention because of its lucrative water concession in Johor, bankers said.
Ranhill Energy has an exclusive licence from the Energy, Green Technology and Water Ministry to provide source-to-tap water supply services to end-consumers in Johor.
The firm also intended to pay out 60% of its net profit as dividends in 2014, translating into a yield of 5%, Hamdan had said at the launch of its prospectus earlier this month.
He could not be reached for comment at press time. Book building for the IPO, which was oversubscribed, closed on July 15 for institutional investors and July 11 for retailers.
Close to half of the group’s turnover comes from its environment segment, which also comprises water and wastewater operations in China. Its oil and gas (O&G) business is No. 2, making up 37% of revenue.
Maybank Investment Bank is the principal adviser for the share sale and joint global coordinator, bookrunner, managing underwriter and underwriter, together with CIMB Investment Bank.
The IPO of 407 million shares priced Ranhill Energy at the top of its indicated range at RM1.85 apiece.
The company had noted in its prospectus that its “recent experience in leading a consortium of the country’s first LNG regas terminal provides valuable lessons to improve this method of contracting in the O&G industry in Malaysia. We plan to secure such further contracts based on our track record such as the Zawtika Development Project in Myanmar and the alliance contract for the Malacca LNG regas unit”.
Ranhill Energy also said it aimed to pursue future O&G jobs with Petronas such as marginal fields, enhanced oil recovery, the Refinery and Petrochemical Integrated Development in Johor, as well as the construction of more LNG terminals in Peninsular Malaysia.

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