22/11/2011 (Business Times) - Fitters Diversified Bhd has acquired a 30 per cent stake in a rice husk-fuelled biomass power plant project in the Philippines, said its controlling stakeholder Datuk Richard Wong Swee Yee.

Under the deal, Fitters will be part of a team that comprises Solutions Using Renewable Energy Inc (SURE), Bangkok-based Nollen Group and Holland’s Topec W2E Holding BV, which is part of the family-run Pon Group with yearly sales of €5 billion (RM21.4 billion).

The special purpose vehicle (SPV) they formed will provide power to Pepsi Cola Products Philippines Inc (PCP), the country’s second largest bottler.

PCP is some 30 per cent owned by Pepsico, the US soft drink giant.

Fitters has been in the spotlight in recent months, as investors and sceptics awaited if Wong could deliver on his boast to turn Fitters into a renewable energy (RE) play.

“We are going to the Philippines because they offer the highest tariffs in Southeast Asia,” Wong said in an interview with Business Times.

The current tariff in Philippines is US$0.15 per kwh (46 sen) compared with Malaysia’s proposed rate of 30 sen per kwh.

According to Wong, the SPV will provide power to the Pepsi plant under a built, own operate and supply (BOOST) agreement.

The BOOST agreement is for a 10-year period.

“With this being our maiden project with Pepsi, if we successfully undertake the project, we may have the opportunity to supply RE to Pepsi’s 10 other bottling plants there.

“We had to start somewhere to build up our RE division,” Wong explained.

He added that the Pepsi job has come in at the right time as Fitters is in the midst of rolling out its RE plant in China.

The plant has been built and is undergoing final testing, upon which Fitters will be able to generate 3MW of power to China’s national grid. The power plant is expected to generate RM7.8 million in revenue on an annualised basis.

Wong is banking on RE to take Fitters to the next level.
Last year, the businessmen took a gamble by buying a distressed oil palm mill in Kedah, which eventually helped boost Fitters' revenue base and shed its identity as the nation's biggest fire-fighting company.

That move also helped Fitters double its market capitalisation to about RM218 million, while year-on-year, revenue in 2010 grew to RM189.76 million from RM126.23 million in the year before.

This year, the company's group level sales is expected to exceed the RM400 million mark, with a revenue of RM102.74 million for the first three months ended March 31 2011.

"Fire-fighting is still an important business for us. It's our bread and butter, but for those who doubted our ability to transform the company, it's time to call their bluff," said Wong.