New Labuan Power Plant To Strengthen Energy Security, Boost Investor Confidence - DPM Fadillah

LABUAN, Jan 27 (Bernama) -- The 120-megawatt Rancha power plant is expected to significantly strengthen Labuan’s power supply reliability, resolve longstanding electricity disruptions and enhance the island’s attractiveness as an investment destination, said Deputy Prime Minister Datuk Seri Fadillah Yusof.

He said the project reflects the Federal Government’s firm commitment to ensuring energy security, system reliability, and long-term sustainability, particularly for strategic regions such as the Federal Territory of Labuan.

“This project is not merely symbolic of the start of a power plant development, but a manifestation of the government’s commitment to providing a stable, efficient and resilient electricity supply that supports economic growth and the wellbeing of the people,” he said when officiating the groundbreaking ceremony of the Rancha Power Plant project at Rancha-Rancha Industrial Zone here, today.

Fadillah expressed appreciation to PG Energia Sdn Bhd, a subsidiary of Petronas Gas Bhd, SEC Power Sdn Bhd, a subsidiary of Sabah Energy Corporation Sdn Bhd, and Sustainable Power Sdn Bhd, a subsidiary of Sabah Electricity Sdn Bhd (SESB), for their investment commitment, technical expertise and continued confidence in Malaysia’s energy sector. 

Rancha Power Sdn Bhd, which is spearheading the power plant project, is a strategic joint-venture between PG Energia, SEC Power and Sustainable Power.

Construction of the facility is scheduled to begin in February this year, with commercial operations targeted to commence on Jan 1, 2028.

Fadillah said a sufficient and reliable power supply is a critical prerequisite for Labuan, which functions as an international financial centre and a strategic offshore business hub, noting that energy stability directly influences investor confidence and economic competitiveness.

“Without a stable and reliable power supply, no economic agenda, whether in finance, industry or social development, can be realised sustainably. This project will provide assurance to investors and pave the way for more investments into Labuan,” he said.

Fadillah, who is also Energy Transition and Water Transformation Minister, said the implementation of the project is in line with Prime Minister Datuk Seri Anwar Ibrahim’s announcement in December 2023, which outlined a long-term solution to address persistent power supply disruptions in Labuan through the development of a new power station.

At the time, the Prime Minister said the Federal Government had proposed that Petroliam Nasional Bhd (Petronas) undertake the construction of a new power plant using a fast-track approach to resolve the island’s electricity supply issues.

Anwar also noted that while the government prioritises project implementation through an open tender system, Petronas’ proven capability and credibility eliminate concerns related to governance issues, including commissions or vested interests.

He said that once completed, the new power plant would strengthen the operational capacity of SESB, which currently serves as the electricity supply operator for Labuan.

Fadillah said the Rancha power plant forms part of the government’s broader energy transition strategy under the National Energy Transition Roadmap (NETR), which is anchored on three key pillars -- security of supply, environmental sustainability, and affordability for consumers -- while targeting net-zero carbon emissions as early as 2050.

He stressed that Malaysia adopts a “transition, not disruption” approach in its journey towards decarbonisation, whereby cleaner and more efficient conventional energy sources such as natural gas and high-efficiency plants continue to play a stabilising role as renewable energy integration is progressively expanded.

In this regard, he said the Rancha Power Plant should be viewed as critical transition infrastructure that ensures system reliability while enabling greater integration of renewable energy in the future.

Fadillah noted that the project was developed based on comprehensive technical analysis and system planning, taking into account the ageing power generation assets in Labuan, some of which have been in operation since the early 1980s, as well as projected increases in electricity demand driven by economic and industrial growth.

He added that strengthening Labuan’s energy infrastructure is also strategically aligned with Malaysia’s regional energy agenda, including the ASEAN Power Grid initiative, which aims to enhance cross-border electricity trade and enhance regional energy resilience.

“With its strategic location, Labuan has the potential to play a key role as an energy and logistics node within the regional energy ecosystem. Strengthening its power infrastructure supports both national and regional objectives,” he said.

Fadillah said the Energy Transition and Water Transformation Ministry would continue to ensure that all energy projects are implemented in a structured and phased manner, underpinned by strong governance and full compliance with safety, regulatory and environmental standards.

He expressed confidence that, with the support of the Federal Government, Labuan authorities, and close cooperation among stakeholders, the project would serve as a catalyst for strengthening Labuan’s energy system and contribute meaningfully to the territory’s sustainable and competitive economic development.

-- BERNAMA