Sinohydro-Naim JV job a boost for sentiment

But analysts still unclear how it will benefit local firms
PETALING JAYA: The RM209.1mil job secured by Sinohydro Corp and Naim Holdings Bhd to undertake part of the transmission line projects for the Bakun-Similajau transmission system is a boost for sentiment but details are still lacking overall on how such joint ventures (JV) will benefit local companies.

The award comes soon after the announcement on Monday that a Chinese state-owned company, State Grid Corp of China, would partner 1Malaysia Development Bhd to invest up to US$11bil to develop the Sarawak Corridor of Renewable Energy (Score).

Naim had announced on Wednesday that the transmission line job was secured from Sarawak Energy Bhd via Sinohydro-Naim JV, an unincorporated JV in which Naim has a 40% stake.

Naim’s potential jobs include a resettlement village project valued at RM200mil, an affordable housing project (RM150mil) and road works (RM120mil).

These are besides an offer to undertake a road rehabilitation project in Fiji, the first phase of which is valued at RM37.3mil.
Meanwhile, an analyst with a local investment bank said while the recent announcements were certainly a boost for sentiment, such announcements were routine every time Sarawak faced an election year.

Sarawak is scheduled to hold state elections towards the end of this year or in 2011.
“This time around, there has been an influx of JVs with foreign companies due to funding issues.

“So, naturally the foreign ones will get the bigger slice but how this will be balanced against the interests of local companies is still to be seen,” he said.

The analyst does not have Naim in his coverage but based on an OSK Research Sdn Bhd report by Jeremy Goh, Naim stood to gain RM83.6mil from its stake in the JV.

The analyst said although a number of multi-billion ringgit projects were planned for Score, the timeline and breakdown of the projects were still “hazy”.

Goh said in his report that there was strong “political incentive” for jobs to be rolled out before the polls.

“Under Score, there are plans to develop Similajau into an industrial zone,” he said.
He added that the plans included an aluminium smelter, a deepwater port and a rail link to Tanjung Manis.