Czechs cancel CEZ sell-off

The Czech cabinet has decided to cancel the sale of power company CEZ, responsible for 65 per cent of the country’s electricity production. Instead, the state-controlled group will undergo an asset restructuring to help it face domestic competition, Finance Minister Jiri Rusnok said.

A bidding process for a 68 per cent stake in CEZ failed to attract any party willing to meet both the strict sale conditions and the reserve price established by the Czech government. A minimum price of 200bn crowns ($5.5bn) proved too much for the foreign power groups who had been attracted by the prospect of acquiring CEZ assets.

Instead, a restructuring of CEZ was outlined by chairman Jaroslav Mil, who said the company would be focusing on the Central European market, in the absence of a Western partner.

As part of the proposed restructuring the state will buy a 66 per cent stake in the national grid transmission system from CEZ in exchange for holdings in the regional power distribution companies. The stakes will be independently valued and are estimated to be worth 10-15bn crowns.

The reintegration plans are unlikely to be well received by the west European energy firms who have built up large stakes in the distributors, and may also face opposition from Czech competition authorities.

UES and E.ON study Russian power projects

Russia’s electricity monopoly RAO Unified Energy System (RAO UES) and Germany energy giant E.ON are to establish a joint enterprise aimed at expanding Russia’s electricity generation capability. A joint statement from the companies said that consideration would be given to adding 1000 MW in new or expanded facilities.

E.ON will have a controlling stake in the venture and will create a consortium of international investors, including large international financial institutions, and will manage the company.

Selection of the sites will take place in November and may include a 450 MW power plant at Pskov costing $120m.

Estimates of the amount of investment needed in Russia’s power sector over the next ten years have ranged from $20bn to $50bn.

Armenia consolidates power grid

The Armenian Energy Ministry has announced that its four energy distribution companies, set for privatization, have been merged into one – renamed the United Power Grid.

The four companies will now operate as regional services with reduced staff. The United Power Grid will have a three-tier management – general council, board of directors and executive body.

The reorganization is intended to make the networks more attractive to potential foreign investors.

An attempt to sell 75 per cent stakes in the distribution grids failed in April 2001 when the auction failed to attract any bids. Foreign investment is critical to Armenia, which plans capital investments in the energy sector of $1.5bn over the next 20 years.

Serbian energy projects require $2bn

Serbia is to seek international loans totalling $2bn in an attempt to revive its energy sector and stabilize electricity, gas and fuel supplies.

Energy minister Goran Novakovic told an investors forum that it would offer joint ventures and BOT projects to speed recovery of a sector heavily damaged during NATO’s 1999 bombing of Yugoslavia.

He said that Serbia would need to raise electricity prices by 50 per cent during 2002 as part of IMF-backed reforms.

VA Tech lands hydro orders

Austrian hydropower plant equipment specialist VA Tech Hydro has won two new orders worth a total of €75m ($66.2m) for projects in Turkey and South Africa.

The largest contract is part of a €550m project to construct a hydropower plant on the river Ermenek in southern Turkey, which it shares with BM Mühendlik ve Insaat, Alpine Mayreder Bau, Alstom Power, Voith Siemens Hydro and Verbundplan.

VA Tech will be responsible for the entire hydraulic steelwork, the penstocks and cranes, part of the turbines and part of the electrical equipment.

The second order is for the upgrade of the Drakensburg pumped storage scheme in South Africa to resolve inherent thermal stress and vibration problems in the original equipment.

Control contract

ABB will install five new electricity load dispatch centres and related IT for Algerian power company Sonelgaz.

The $30m contract calls for one national control centre, four regional centres and a back-up centre and will include computer systems, data acquisition terminals and associated buildings. The new centres will improve monitoring and control of Sonelgaz’s power generation and transmission system.

News digest

Bulgaria: A consortium led by a subsidiary of RWE Solutions and the steelmaker DSD Dillinger has signed an EPC agreement with the Maritza East III Power Co. to modernize its 800 MW thermal power plant and construct a scrubbing plant near Stara Zagora in southeast Bulgaria. The contract is thought to be worth in the order of £160m ($227m).

Egypt: InterGen and Edison SpA have announced that Sidi Krir 3 & 4, a 685 MW natural gas fired power plant, has achieved commercial operation and is delivering power into the Egyptian power grid. It is Egypt’s first BOOT (build, own, operate and transfer) project.

Hungary: New legislation allowing Hungarian district heating utilities to expand into electricity generation has led to Wärtsilä winning orders for three gas fired power plants along with ten-year maintenance agreements. Commercial operation of the plants is scheduled for September 2002.

Kazakhstan: International Power plans to sells its 50 per cent stake in Kazakh utility Karaganda Power to its partner Orman, after the government froze a planned electricity tariff increase. International Power said the decision “had made it impossible for foreign investors to succeed in the Kazakhstan power sector”.

Poland: Vattenfall has agreed to sell its holdings in two Polish district heating companies, Ostrów and Ustka, to Sydkraft allowing it to concentrate resources on EW in Warsaw and GZE in Silesia.

Romania: RWE has signed a memorandum of understanding with Romanian electricity distribution group Transelectrica to build the country’s first converter electricity station at a cost of $25m. The project marks a vital step in Romania’s bid to join the European Association of Power Transporters.

Turkey: Clyde Bergemann Materials Handling has delivered the first part of a £6.3m ($9m) contract to supply ash handling equipment to Mitsubishi’s Elbistan B Thermal power plant in Turkey. Each of the four 360 MW lignite fired boilers will be fitted with a CBM ash handling system capable of combined ash throughput of 960 t/h.

UAE: Alstom’s T155 Gas Insulated Switchgear has enabled two United Arab Emirates power stations to connect to the public grid. DEWA selected the equipment to handle high temperatures and humidity. The upgraded power station D at Jebel Ali and the newly built power station K, about 2 km further along the coast, will both be routed through the T155, although each power station has its own transformers.