A Malaysian energy service company (ESCO) recently signed the Master Energy Services Agreement (MESA) with a host site from the wood sector, making it the first to implement energy efficiency projects under the energy performance contracting (EPC) concept. The signing of the MESA is an achievement for the programmes on ESCO Support, Energy Efficient Technology Demonstration and Financial Institutional Participation under the MIEEIP.

The Gemas-based HeveaBoard Sdn Bhd signed the MESA with Mensilin Holdings Sdn Bhd, a local ESCO on 7 April to implement a fuel-shifting project, which entails the installation of a wood-based boiler to replace the oil-fired one.

The signing ceremony was witnessed by the Secretary-general of the Ministry of Energy, Communications and Multimedia, Datuk Dr Halim Shafie and the United Nations Development Programme (UNDP) Resident Representative Ms. Maxine Olson. Signing on behalf of HeveaBoard was its chairman, Tan Sri Dato' Mohamed Rahmat, while Ir. Mohamad Adan Yusof signed for Mensilin as the executive director.

The significance of the project was reflected by the large turnout for the event, which was hosted at the HeveaBoard premises.

The project was selected for the wood sector based on the energy audits conducted by the MIEEIP team. Several no-cost, medium-cost and high-cost measures were recommended for energy and cost savings. The fuel-shifting project is part of the high investment measure that has the potential to reduce the company's fossil fuel consumption by 90 percent, and subsequently slash the monthly fuel bill from an average of RM150,000 to about RM60,000.

The team worked with the Malaysian Timber Industry Board (MTIB) in coordinating the energy audit activities as well as the energy-use benchmarking for the wood sector.

The MESA is a sample document developed by the MIEEIP and is the first of its kind in Malaysia to assist ESCOs and industries in the implementation of energy efficiency (EE) activities.

In his speech, the Minister of Energy, Communications and Multimedia, Datuk Amar Leo Moggie said the wood sector is one of the most energy intensive sectors among the Malaysian industries, with an energy consumption growth rate of about 19 percent.

"With the recent pressures on fuel price around the world, and with the international crisis involving Iraq, this volume of consumption translates into million of Ringgit annually. Based on recent developments, prices of fuel are going up slowly but steadily. And while the Government is sensitive to the impact on consumers, it will be hard to keep prices down if international oil price continues to rise," said Moggie. The speech was read out by the secretary-general.

Moggie added that many companies still do not see the potential in energy efficiency, which could reduce the company's operating costs and at the same time, improve its competitiveness.

"I am sure the success of this demonstration project will allay some of the fears and reservations from the industries, financial institutions and even the ESCOs regarding the viability of EE projects," he said.

Ms. Olson commended the two companies for being pioneers in the area of energy performance contracting (EPC) to implement the EE project. She added that the success of the EPC concept will "send the right signal to all the other stakeholders in Malaysia that energy efficiency activities are viable and profitable in this country."

She further added that the innovative approach by the MIEEIP could contribute towards other projects funded by the UNDP and the Global Environment Facility (GEF) throughout the world. Ms. Olson also urged the MIEEIP team and the two participating companies to document and analyse the process in developing and implementing the MESA, as it will be an invaluable contribution to other demonstration projects and the stakeholders.

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