KUB Malaysia Bhd has submitted a proposal to build an incinerator for solid waste in Penang, its managing director Izham Yusoff says.

He said the company submitted its proposal to the Economic Planning Unit of the Prime Minister's Department in June this year and had been asked to negotiate the plan with the Housing and Local Government Ministry.

“Penang is small island and to have a landfill will be quite problematic. With our technology partner -- from a number that we are currently talking to -- we may want to expand the project to other areas,” he said at a media briefing on the company’s future plans in Kuala Lumpur on Nov 30.

He said the incinerator would have a capacity to handle 200-250 tonnes of solid waste per day. It is understood that the company may source the technology from South Korea.

Izham said KUB was sizing up its business plans in waste management for 2005, with a view to move up the scale to provide environmental services in the long term.

Last month, KUB announced that its 40% joint-venture company KUB-Berjaya Enviro Sdn Bhd had received the federal government’s agreement in principle for the privatisation of the solid waste management project at Bukit Tagar, Selangor.

Izham said KUB would finance the RM100 million Bukit Tagar solid waste management project partly from the RM120 million proceeds from sales of assets including a 20-ha land in Bukit Jalil (RM33 million) and 15% stake in Malaysian Sheet Glass Bhd (RM39 million).

The Bukit Tagar project is located on a 810-ha site north of Kuala Lumpur with the landfill taking 243ha and the rest as a buffer zone. The landfill is designed to receive about 3,000 tonnes of solid waste daily initially.

The concessionaire will build, operate and maintain the landfill for 40 years.

Izham also confirmed that KUB would be participating in the co-generation business with Universiti Malaya but added that the question of shareholding had not been finalised, contrary to earlier reports.

It was reported that KUB through its subsidiary KUB Power Sdn Bhd and Wonderful Wire and Cable Bhd would own a 40% stake each in the 36MW plant at the Universiti Malaya Campus in Kuala Lumpur and UM Holdings Bhd the remaining 20%. The independent power producer would sell the electricity to the university at 21 sen per kilowatt-hour.

On the liquefied petroleum gas (LPG) business, he said Progas Pakistan Ltd, its 40%-owned joint venture with Argenta Resources Ltd, would begin operations in January next year.

Total investment cost for the Progas Pakistan LPG plant at Port Qasim is US$40 million (RM152 million). It is expected to generate US$15 million in yearly revenue on a 45,000-tonne throughput for the Pakistani market.

KUB, which also runs an LPG business in the domestic market, said yearly turnover from the division was expected to reach RM180 million.

Izham said the company was now deliberating whether to merge its two subsidiaries in the LPG business, KUB Gas Sdn Bhd and Summit Petroleum Sdn Bhd.

“The issues that we are deliberating touch on having to give up one of the licences, branding, efficiency and resources,” he said.

Izham said though margins in the LPG business were squeezed due to the higher fuel and logistic cost, and despite bottled LPG being a controlled item, the company was still confident of making profit.

“We do not expect the high fuel cost to continue indefinitely and energy prices are expected to come down to a more reasonable level,” he said.

KUB has a 7% share in the local LPG business, in which Petronas is the market leader with a 43% share followed by Shell at 24%, Exxon-Mobil 19% and BP 7%. - SUN