KUALA LUMPUR: Reservoir Link Energy Bhd stands to gain from the Corporate Green Power Programme (CGPP) in terms of order book replenishment and recurring income related to engineering, procurement, construction and commissioning (EPCC) works via its 29 per cent stake in SRM Utama Selembau Sdn Bhd, according to Public Investment Bank Bhd (PublicInvest).
The company's wholly owned subsidiary, Reservoir Link Renewable Sdn Bhd, has signed a shareholders' agreement with MAQO Engineering Sdn Bhd and Sumitomo Corporation to establish SRM Utama Selembau.
As part of the CGPP, SRM Utama Selembau is set to take on the development, implementation, ownership and operation of a 29.99 MWac ground-mounted solar photovoltaic project in Kedah.
This project, awarded by the Energy Commission to the consortium in August last year, holds promising prospects for Reservoir Link Energy.
PublicInvest said the formation of the company was essential to executing the corporate green power agreement with the corporate consumer and the New Enhanced Dispatch Arrangement agreement with the single buyer.
"Upon execution, the company is expected to initiate EPCC works to meet the targeted commercial operation date by December 2025.
"The formalisation of CGPP will benefit Reservoir Link in both EPCC order book replenishment and recurring income via its 29 per cent ownership in SRM Utama Selembau.
"Nevertheless, we expect the EPCC works to only start in the second half of this year. In the meantime, its oil and gas segment will continue to mitigate the temporary slowdown in the renewable energy segment," it said in a note.
The added EPCC works are expected to be awarded to Reservoir Link's 51 per cent-owned Founder Energy Sdn Bhd, with an estimated contract value of RM130 million.
"Our assumption is based on the estimated EPCC cost per megawatt (MW), which is RM4 million to RM4.5 million per MW for the overall 29.99 MWac.
"We estimate this order book will contribute about RM4.2 million to its bottom line, which will mostly be recognised in financial year 2025."
It has maintained a "neutral" stance on the company with a target price of 31 sen.
