The Malaysia Building Society Berhad (MBSB) has entered into an agreement with Solar Management (Seremban) Sdn Bhd (SMS) to provide up to MYR247 million (~$59.91 million) in financing to develop a 50 MW solar project. The solar project will be developed in Rembau, Negeri Sembilan, and is expected to be completed by November 30, 2018.
The funding from MBSB will partly finance the engineering, procurement, construction, (EPC) and commissioning of the solar farm project. This is a Shariah-compliant Islamic Funding and the partnership marks MBSB’s inaugural financing of a solar farm, bringing it closer to its sustainability objectives.
The Islamic financing facility consists of a MYR19 million (~$4.62 million) performance guarantee under the Kafalah concept and MYR228 million (~$55.66 million) of term financing with the sub limit of a MYR137 million (~$515,453) letter of credit under the Tawarruq and Kafalah concepts, respectively.
As per industry sources, Tenaga Nasional Berhad (TNB), a Malaysian utility company, signed a 21-year deal with Solar Management, for the purchase of power generated from the 50 MW solar project.
“We are excited to embark on this golden opportunity especially since the government had introduced policies and initiatives to spur the growth of the renewable energy sector which include the Feed-in-Tariff (FiT) mechanism, Net Energy Metering (NEM), and last but not least the LSS Photovoltaic plant schemes,” said Tee Cheng Hua, director of Solar Management.
“With the leadership of Tee Cheng Hua and the vast experience he obtains in developing, constructing, and operating various renewable energy projects in Malaysia and China, this project is set to become one of the largest solar project in Malaysia and we are honored to be part of it,” said Datuk Seri Ahmad Zaini Othman, president and chief executive officer of MBSB.
“By supporting carbon emission reduction initiatives such as this, it is a testament of our responsibility towards the environment and our commitment to serve the nation and communities in a sustainable manner,” added Datuk Seri Ahmad Zaini Othman.
This is the second instance of Islamic Funding being made available to solar projects in Malaysia. In August 2017, TNB secured MYR339 million (~$82.41 million) in financing from Affin Islamic Bank Bhd for a 50 MW large-scale solar project in Selangor, Malaysia.
Image credit: By Molgreen (Own work) [CC BY-SA 4.0], via Wikimedia Commons