China to expand its power deregulation agenda
China’s State Power Corporation is to develop and operate a nationwide transmission grid and China’s state Planning and Development Corporation is expected to become the electricity market regulator.
John Williams, manager for risk and strategy for Pacific Power, Hong Kong, expects China to introduce a non-compulsory power pool, which permits long-term contracts as well as spot sales.
Part of the plans of increasing generation capacity, a massive expansion of the rural electricity grid is scheduled to improve the competitiveness of agriculture and other rural businesses, following China’s entry to the World Trade Organization.
Williams added most companies involved with independent power projects in China were already making high returns on their investments despite some uncertainty over existing power purchase agreements, which could become redundant in a market-based regulatory environment. He said: “The option to acquire power stations from local Chinese governments would provide very attractive opportunities for investors, as many are not efficiently operated at present.”
The coal industry is also being restructured allowing generators to choose coal suppliers. Liu Yan, director, Datang Power, Beijing agreed: “Current gas prices from the multi billion dollar West-East gas pipeline are too expensive to justify the construction of gas-fired power plants by commercially driven entities.”
Meanwhile, US-based Mirant Corporation has plans to triple its operations in China by 2005. The company has invested $400m in China since 1994.
Datang and Chalco to build 675 MW plant
China’s Beijing Datang Power Generation has joined forces with Aluminium Corporation of China (Chalco) to build a 675 MW coal-fired plant in Shanxi province to supply power to a new aluminium smelter project.
The deal will bind Chalco into a 25 year power purchase agreement (PPA) with Datang Power at a price of RMB0.20/kWh (¢2.4/kWh), which will aid the smelter’s new 280 000 t expansion project. If the deal is approved, Datang will sell excess electricity to the Shanxi local grid.
TNB adds to power portfolio with buy-out of rival
Malaysian state-owned power utility, Tenaga Nasional Bhd (TNB) will buy out debt-laden Malaysian Resources Corporation Bhd’s (MRCB) 70 per cent stake in Sepang Power Sdn for RM115m ($30.26m).
The deal, making TNB overall owner, will allow it to add to its near monopoly of Malaysia’s power supply and demand control. The deal was too good to turn down for TNB since Sepang Power was given approval to construct a 710 MW combined cycle plant on a fast track basis. .
MRCB will use the proceeds of the sale to refinance its debt burden and refocus to its construction and engineering business.
US pushes Japan to hasten power deregulation
The US is clarifying the lucrative world economy incentives to be expected if Japan quicken its energy deregulation plans.
US officials have urged Japan to push electric utilities to unbundle the generation, transmission and distribution assets to make it easier for newcomers to enter the market while guiding the global economy on a path towards growth.
Meanwhile, Enron’s collapse sent a serious blow to Japan’s deregulation plans as the government had been expecting its business in Japan to ease the deregulation process. Although no decision has been made on its Tokyo subsidiary, E Power Corporation, the potential downfall would halt progress on four thermal power generation projects planned last year.
Philippines stalls Napocor sale
State-owned National Power Corporation (Napocor) has frozen the sale of its transmission assets until June this year said Vincent Perez, Energy Secretary.
The initial plan was scheduled for early this year. No reason was given for the delay by Perez, who is also chairman of the power company. The Philippines plans to start its privatization process with the sale of transmission lines whereas Singapore and South Korea started their privatization with generation assets.
Philippine power analysts predict that Napocor, which produces half the country’s power, will auction about 70 per cent of its assets valued at $6bn.
Perez said Gloria Macapagal Arroyo, Napocor president, would commence a two-week roadshow after attending the late-January forum.
Australia: Australia’s power system operator said it had approved two regulated electricity grid projects costing a total A$146m ($76m). The projects linking New South Wales to Victoria and South Australia will boost power supplies in the two states by a total 600 MW.
China: Installation has begun on the first generator unit at the Three Gorges Hydropower Plant on the Yangtze River, which will be the world’s biggest hydro plant upon completion. The move has laid a solid foundation for the operation of the first generator unit in 2003, engineers said.
China: Canadian firm SDI Systems has been awarded a contract for the electrical relay protection subsystems for the 2 x 200 MW Shijiazhuang cogeneration power plant.
India: Bharat Heavy Electricals Ltd of India (BHEL) is diversifying into operation and maintenance of captive power plants. The company is also prepared to take up renovation and modernization of non-BHEL machines.
India: Tata Power Company has bought a 51 per cent stake in the first transmission project in the country that was open for private participation by the government. The 1500 km long, 400 kV line that will cross three regions is expected to cost Rs12bn ($251m) and be operational by 2005.
Japan: Tokyo Gas Company said it had struck a deal with a unit of Royal Dutch/Shell and the state to jointly build a 200 MW, ¥12bn ($97m) new natural-gas power plant near Tokyo.
Philippines: A consortium led by First Generation Holdings Corporation (FGHC) has put its plan to develop a 150 MW project in Batangas on hold because of concerns that there will be insufficient demand to warrant the project. Peter Garrucho, president, FGHC said the absence of investors has forced the consortium to suspend the $58m project.
Thailand: Siemens signed an Bt870m ($19.9m) deal with the Provincial Electricity Authority to construct and install 11 substations holding 115 kV in central and southern areas of the country within 18 months.
Thailand: Laem Chebang Power Company, a subsidiary of Finland’s Fortum, has completed the $80m construction of a 100 MW combined cycle cogeneration plant in Laem, Chonburi.
Vietnam: Construction of a 544 km transmission line from the town of Pleiku in the central highlands through Dac Lac and Ho Chi Minh City is expected to cost VND2048bn ($146m). Ground breaking is planned for early 2004.