Keppel Infrastructure, China firm bag $5.4b waste management deal

The infrastructure arm of Keppel Corporation has won a HK$31 billion (S$5.4 billion) contract to design, build and run the first integrated waste-management facility in Hong Kong.
The infrastructure arm of Keppel Corporation has won a HK$31 billion (S$5.4 billion) contract to design, build and run the first integrated waste-management facility in Hong Kong. PHOTO: REUTERS

Keppel shares close 13 cents up after announcement of contract to build and run facility in Hong Kong

The infrastructure arm of Keppel Corporation has won a HK$31 billion (S$5.4 billion) contract to design, build and run the first integrated waste-management facility in Hong Kong.

Keppel Infrastructure Holdings secured the work in league with China Harbour Engineering Company. The facility will be housed off the coast of Shek Kwu Chau, an island to the south of Lantau Island.

Keppel Infrastructure has a share of HK$11.3 billion in the deal, with an addition of up to HK$9.6 billion for escalation provisions and other contingencies, said Keppel yesterday.

A China Harbour unit will undertake the engineering, procurement and construction phase. This will involve a reclamation of a 16ha area, designing and building breakwaters and the integrated waste-management plant and related port facilities on the reclaimed island.

During this phase of the contract, the Keppel Infrastructure unit will provide its proprietary waste-to-energy technology and build and run other facilities, including the mechanical treatment plant.

Keppel Infrastructure Services will then operate and maintain the facilities for 15 years after they are completed in 2024.

Keppel Infrastructure chief executive Ong Tiong Guan noted that the project will contribute to Hong Kong's sustainable urbanisation, while reinforcing Keppel's leadership in waste-to-energy technology and operations.

HK FORESIGHT AND RESOLVE

The project reflects the Hong Kong government's foresight and resolve to effectively and holistically address waste management. Advanced waste incineration technology is able to meet stringent environmental standards and is hence one of the most widely accepted methods of waste management in developed markets.''

KEPPEL INFRASTRUCTURE CHIEF EXECUTIVE ONG TIONG GUAN

"The project reflects the Hong Kong government's foresight and resolve to effectively and holistically address waste management. Advanced waste incineration technology is able to meet stringent environmental standards and is hence one of the most widely accepted methods of waste management in developed markets," he said.

The new facility will be able to reduce the total volume of waste it treats by more than 90 per cent - a move that will help extend the lifespan of landfills, given that Hong Kong now landfills its non-recycled waste.

It will feature a waste-to-energy plant that can treat about 3,000 tonnes of mixed municipal solid waste a day, as well as produce around 480 million kilowatt-hours of gross electricity a year. The surplus electricity beyond plant consumption will be exported into the grid. This could power up to 100,000 households and help reduce 0.44 million tonnes of carbon dioxide each year.

Keppel shares closed 1.7 per cent or 13 cents up at $7.76 yesterday, after the midday announcement.

Nomura said in a report said the contract win is positive for Keppel. "While near-term earnings contribution is limited, medium-to long-term visibility for the infrastructure division continues to improve," it said, maintaining a "buy" rating on the stock, with a target price of $7.90.

A version of this article appeared in the print edition of The Straits Times on December 02, 2017, with the headline 'Keppel Infrastructure, China firm bag $5.4b waste management deal'. Print Edition | Subscribe