Governance and Strategy
Malakoff is continuously reviewing and improving its strategic direction, initiatives and policies in order to ensure sustainable growth for our core business segments. This is enabling us to cater to the fast-evolving and challenging economic and business environments as well as adopt strategies that ensure we meet the ever-changing demands of our customers. The following are some of the initiatives we have set in place to guide us in our day-to-day operations and ensure we uphold good marketplace behaviour.
Business Ethics and Transparency
The Group Whistleblower Policy launched in 2015 provides employees and third parties dealing with Malakoff with proper procedures to disclose cases of improper conduct such as misconduct or criminal offences or malpractices to the Company. A whistleblower is assured confidentiality of identity, to the extent reasonably practicable. This includes protecting the whistleblowers from any detrimental action that may result from the disclosure of improper conduct, if the disclosure is made in good faith.
The Whistleblower Policy also serves to ensure that fair treatment is provided to both the whistleblower and the alleged wrongdoer when a disclosure of improper conduct is made. A disclosure of improper conduct can be made orally or in writing via a letter or e-mail to email@example.com which is accessible only by the Chief Internal Auditor of Malakoff. The Whistleblower Policy is available on Malakoff’s corporate website at http://www.malakoff.com.my/About-Us/Whistleblower-Policy/InternalAudit.
Starting 1 January 2016, Malakoff also implemented Code of Conduct ("COC") on all its employees that sets out the principles, practices and standards of good personal and corporate behaviour, as mentioned in the Corporate Governance Statement on pages 62 to 84.
Strategic Business Development
The Group has an attractive portfolio of international power and water production assets and remains committed to the power and water businesses. There are limited opportunities in the domestic conventional power generation industry. However, opportunities in renewables such as local solar and Waste-to-Energy (“WTE”) projects continue to be pursued, particularly in anticipation of the Malaysian Government’s target to achieve a cumulative solar capacity of 1,000 MW by 2020, commencing with 250 MW in 2017. As a result, there is a need to aggressively explore strategic opportunities overseas, focusing on mergers and acquisitions (“M&As”) for quick and sustainable growth.
Given the dynamic domestic landscape in Malaysia, we need to continuously challenge ourselves to deliver a competitive electricity tariff to the off-taker and ultimately to consumers. We are strategically on the lookout for new overseas ventures and acquisitions, including potential business diversification which would add value to our shareholders.
Malakoff is committed to undertaking responsible investment. Our process for new investments takes into account heightened concerns about the environmental and social impact of our target markets and the solutions and support required to ensure sustainable value creation. In delivering economic growth, our aim is to generate respectable profits for existing and new business opportunities without sacrificing long-term economic value creation. With regard to our existing assets, we are continuously working to improve operational efficiency and ensure sustainable business operations.
At the same time, in light of dynamic market trends, we are continuously exploring sustainable diversification opportunities such as operation and maintenance services (“O&M”), recycling and new technologies. For any new investment, a process is in place whereby every new investment proposal is diligently vetted by the Management Investment Committee under a strict review and approval process, before it is presented to the Board of Directors for the final mandate.
Trends affecting the organisation and influencing sustainability policies
Industrial trends may affect Malakoff and we are continuously monitoring the power and water demand growth of our target markets as well as exploring private public partnership and groupwide collaboration opportunities. Where some of our target markets face the potential introduction of more stringent environmental policies and carbon policies, which will eventually trigger more rigorous requirements and preparation when developing new projects, we leverage on Group synergies i.e. our combined wealth of experience and expertise, a strong management team and skilled employee workforce, to strengthen our position.
Key achievements and challenges
Malakoff has delivered power and water projects that meet local and international requirements. As of December 2015, the Group’s effective power generating capacities stood at 5,346 MW and 690 MW for Malaysia and our international markets respectively. The total effective capacity for water production was 358,850 m3/day. In 2016, Malakoff delivered the 1,000 MW Tanjung Bin Energy (“TBE”) power plant, which began commercial operations on 21 March 2016, following its successful construction, testing and commissioning phases. TBE is Malaysia’s first independent power producer (“IPP”) project that was awarded by the Energy Commission (“EC”) via a competitive bidding process. This has raised our effective generating capacity to 6,346 MW for Malaysia. Malakoff also secured a three-year power purchase agreement (“PPA”) extension for Port Dickson Power that commenced in March 2016.
On the international front, Malakoff has added a water desalination capacity through the 45 percent owned Al-Ghubrah IWP in Oman where the project achieved its commercial operation date (“COD”) on 19 February 2016. The project contributes an effective capacity of 85,950 m3/day raising the total effective capacity of the Group to 444,800 m3/day.
We remain selective about growth opportunities and consider the overall positive impact of our undertakings. We are focused on sustainable growth by acquisition for the near-term and have prioritised projects based on optimised resources. Moving forward, we aim to expand our work in the area of carbon reduction strategy and strengthen our foothold in the Renewable Energy (“RE”) segment.
In line with Government’s ambition of introducing largescale solar projects, Malakoff participated in the Large Scale Solar PV Plant bidding programme under the Energy Commission (“EC”). On 15 December 2016, the EC issued a letter of acceptance of offer (“Letter”) to the Malakoff stating that it had been selected to develop the 50 MW project subject to full compliance and acceptance of the terms and conditions set out in the Letter.
Having gained significant experience in the bidding process for RE projects, Malakoff is in a better position to support its growth strategy to bid for commercially viable RE projects. The plan going forward is to develop an optimised RE portfolio for the Group.
Malakoff has in place its framework and processes to comply with the relevant laws and regulations. This includes Malakoff’s Audit & Verification programmes, which are conducted on a quarterly basis as part of its efforts to ensure compliance with the relevant Health, Security, Safety and Environment (“HSSE”) regulations. However, despite these efforts, in October 2016, two notices were received for issues relating to incomplete labelling of scheduled waste, air emissions and competent persons. The year also saw the Tanjung Bin operations issued two improvement notices relating to scheduled wastes, housekeeping, industrial effluents and clean air.
In response to these notices, Malakoff has since put in the necessary resources and initiatives to successfully address all the requirements. We continue to diligently monitor regulatory requirements to ensure our operations are within the requirements.
On another note, changes relating to Clean Air Regulations will come into effect in 2019. These changes include the inclusion of hydrogen fluoride (“HF”), hydrogen chloride polychlorinated dibenzodioxins (“HCL PCDD”)/polychlorinated dibenzofurans (“PCDF”) and the introduction of new lower limits for carbon monoxide ("CO") and mercury. Proactive efforts are being untaken in order for Malakoff to comply with the changes to the Clean Air Regulations.