The Board of Directors of IEV Holdings Limited (IEV) have advised that pursuant to the completion of the Feasibility Study on liquefied natural gas (LNG) distribution in Malaysia, both IEV and Gas Malaysia have decided to pursue further business cooperation initiatives for the distribution of compressed natural gas (CNG) instead.
As such, IEV and Gas Malaysia have entered into a Joint Venture Agreement (JVA) to incorporate a Joint Venture Company (JVC), to pursue and engage in the following businesses:
(a) The provision of the sale, supply and transportation of CNG to potential customers;
(b) the carrying out of the design, construction, installation, commissioning and operation of:
i. Pressure Regulating Unit (PRU) at each customer’s premises; and
ii. Gas Malaysia-IEV mother station at each supply station;
(c) the purchase and operation of CNG trailers to transport CNG from Gas Malaysia-IEV mother station to the PRU located at customer locations; and
(d) any other business relating or incidental to or compatible with the above or any other business as may be agreed upon by the parties from time to time.
Inherent in the building out of CNG infrastructure is the potential for increased momentum for Malaysia’s not insubstantial natural gas vehicle industry; already there are more than 50,000 NGVs operating in the country where CNG is priced at about one-third the price of petrol. Professor Dr Barkawi Sahari of Universiti Putra Malaysia (UPM) said that based upon current fuel prices, each petrol-powered vehicle costs an average of 23 sen per kilometre to operate (Malaysian Insider). “For CNG engine users, it only costs around 11 sen. That is 52% cheaper,” said Barkawi.
The JVC will be 25% and 75% held by IEV Malaysia and Gas Malaysia respectively, and is expected to be incorporated as soon as the condition precedents (CPs) are fulfilled, for which three months has been allocated. One of the CPs requires that the JVC obtain the necessary approvals from the relevant regulatory authorities in Malaysia.
Construction and supply contracts will not be awarded until all the CPs have been fulfilled, with construction of the necessary infrastructure for the CNG distribution system not likely to take place in 2014.
President and CEO of the Group, Christopher Do commented, “The formation of this joint venture with Gas Malaysia will set forth IEV’s vision to deliver natural gas as a clean and economical alternative energy to costly liquid fuels throughout the region, following our successful development of the two CNG supply chains in Indonesia and Vietnam.”
Gas Malaysia’s core business is to sell, market and distribute natural gas as well as construct and operate the Natural Gas Distribution System within Peninsular Malaysia. Gas Malaysia have a network of natural gas pipelines connecting customers to the Peninsular Gas Utilisation Transmission System owned and operated by PETRONAS Gas Berhad.
(Primary Source: IEV)