Keppel, KIT propose 10-year extension on capacity trolling agreement for KMC Plant

The parties plan to extend the agreement until 2040.

The Infrastructure Division of Keppel (Keppel) and Keppel Infrastructure Trust (KIT) have proposed to amend and extend the Capacity Tolling Agreement (CTA) for the Keppel Merlimau Cogen (KMC) Plant by 10 years to generate up to $1.1b in long term capacity payments for the combined cycle gas turbine power plant.

“This will provide a stable base of contracted cash flows to underpin a refinancing of KMC’s existing loan facility, which will unlock value for both shareholders with the resumption of the asset’s contributions to Keppel and KIT,” the parties said in a bourse filing.

KIT owns 51% of KMC, whilst Keppel has a 49% stake in the plant.

The parties are also proposing to amend and extend the operations and maintenance (O&M) contract between KMC and Keppel’s Infrastructure Division by another 10 years to 2044, which is worth up to about $342.84m. 

“The extension of the CTA and the O&M contract would strategically position Keppel as one of the major power generators in the Singapore electricity market and would further augment its market position as a leading Singapore energy player,” the parties added.