Philippines generates power funds

Philippines energy secretary, Vincent S. Perez, announced that the government is expecting to generate funds of between $2.4bn and $2.7bn from the sale of the transmission assets of the National Power Corp. (Napocor). In line with the newly-enacted Electric Power Industry Reform Act, Napocor’s transmission and generating assets will be privatized next year.

The sale is to be processed via the newly-created Power Sector Assets and Liabilities Management Corp. (Psalm), while the National Transmission Co. (Transco) is to house Napocor’s transmission assets.

International firms such as National Grid plc. of the UK, Electricité de France, Kyushu Corp and Energy Power Development Corp. of Japan are interested in bidding.

A further $200m is expected in October this year from the Asian Development Bank (ADB) as part of a $600m loan for restructuring the country’s power sector. Perez said that the funds will be used to meet the transition costs of the restructuring programme. The ADB is waiting for confirmation that all eight loan conditions have been met.

Perez also announced that natural gas was ready to flow from the Malampaya offshore gas field in Palawan to Batangas.

India needs $200bn

Indian Power Minister, Suresh Prabhu, claimed that the country’s power sector needs around $200bn to close the widening gap between demand and supply.

Speaking at a meeting in New Delhi, he said that the government was speeding up reforms and working towards establishing a coherent policy that would satisfy investors and the power industry in India.

The Minister claimed that the huge potential in the sector could be exploited in a ‘win-win’ manner to recover lost opportunities.

An estimated 100 GW of new power and the construction of a national power grid are planned for the next ten years.

Prabhu said that the main challenge for the power industry was to bridge the gap between the tariff rate and the average cost of power which presently stood at Rs500bn ($10.6bn), keeping the industry in the red.

Low rainfall and high prices in NZ

The lowest rainfall for nine years has resulted in inadequate inflows to New Zealand’s critical hydro reservoirs in South Island, causing electricity prices to spiral.

The hydro system in the south usually supplies generation to the more populous North Island via the HVDC link. For many weeks this year, the flow has been in the reverse direction as the South Island generators have been struggling to maintain reservoir levels.

Wholesale prices have moved from around NZ$40 ($16.3) per MWh to as high as NZ$700 per MWh. The South Island generator, Meridian Energy, has been subjected to an inquiry by the Market Surveillance Committee at the request of OnEnergy for allegedly forcing up wholesale energy prices.

ABB to electrify rural Laos

Global technology group ABB has been awarded a $17m contract to design and build a 340 km power transmission line complete with a 282 km power distribution network. State utility Electricite du Laos (EDL) placed the order for the two year project financed by the Asian Development Bank.

Richard Siudek, executive president and head of ABB’s utilities division, said: “Accelerated completion of the network will enable EDL to focus its resources on delivering electricity to rural areas. The project will increase the number of electrified villages by around three per cent.

Sri Lanka sets up a regulator

General manager of the Ceylon Electricity Board (CEB), D.G.D.C. Wijeratne, an -nounced plans to create an independent autonomous regulatory commission for the power sector to encourage private sector investment. The proposed legislation will be presented in Parliament by December 2001 and the commission should be operational by the end of 2002.

The reforms will stop short of privatization and focus on restructuring the CEB in consultation with trade unions.

The new commission is designed to incorporate economic, technical and social regulations to ensure quality standards and incorporate the private sector. State monopoly on power has not attracted private sector investment.

More speculation on Dabhol

India’s federal government has ruled out the possibility of the National Thermal Power Corporation (NTPC) buying Enron’s 65 per cent stake in the troubled Dabhol Power Company (DPC). The $3bn project has stirred interest among Indian financial institutions, who said they would take over the DPC if Enron pulled out, and AES Corporation, which has expressed strong interest in being involved.

News digest

Australia: Chief executive of Loy Yang Power, Ian Nethercote, said that his firm could provide a significant amount of Victoria’s future electricity needs without the construction of a large new facility. An upgrade and enhancement programme could, he said, increase the capacity of Victoria’s largest electricity generation plant by up to 300 MW.

Brunei: In view of the proposed Bakun hydroelectric dam in Malaysia, power utilities in Sarawak, Sabah, Brunei and Indonesia are expected to meet in September 2001 to consider implementing a pan-Borneo power grid. Sources estimate that Sarawak could generate 40 000 MW of power, half from hydropower, while the Bakun dam project will generate 2400 MW.

China: Construction of China’s second largest hydropower station, the Longtan plant, began on July 1, 2001. Costing around $2.93bn, the project will have a combined capacity of 5400 MW and is due for completion by 2009.

India: India’s coal ministry pulled out of three power projects saying it could no longer make financial commitments towards projects that did not ensure the offtake of coal. The cancelled projects are the Daewoo promoted 1070 MW Korba project in Chattisgarh, the 700 MW Yamuna Nagar thermal plant promoted by Haryana Vidyut Prasaran Nigam and the 800 MW Jawaharpur project by Jawaharpur Power Ltd.

Malaysia: A report from UBS Warburg says that Malaysia’s number one electricity group, Tenaga, is expected to reap the benefits of a recovery in demand for electricity in 2002. UBS says that Tenaga is likely to receive more flexible terms in future power purchase agreements and is not likely to be held to a freeze on tariffs in the event of a increase in gas prices.

Pakistan: The World Bank has said it will withhold loans to Pakistan until the restructuring and privatization of the energy sector is back on schedule. The spokesman for Pakistan’s ministry of water and power said that the financial and administrative restructuring of the Water and Power Development Authority and Karachi Electric Supply Corporation were currently underway.

Singapore: Key features of New Zealand’s electricity market are to be incorporated into Singapore’s electricity market under a joint venture with M-co. The firm, which has been operating New Zealand’s market since 1996, has now taken a 49 per cent stake in Singapore’s electricity market company. New Zealand’s model has been chosen as it addresses a flaw in the existing market.