State blocked Dabhol rights
An independent arbitration panel under the auspices of the ICC International Court of Arbitration in Paris has ruled that the Indian State of Maharashtra must pay $125m to Bechtel Corporation and GE as compensation for ‘appropriating the assets’ of Dabhol Power Corporation (DPC). The $2.9bn stalled 2184 MW power project has been the subject of a series of protracted disputes since electric power generation ceased in 2001.
The panel found that the State of Maharashtra, which has a 14 per cent share in DPC, had breached provisions of DPC project agreements and effectively disabled DPC itself from pursuing its remedies.
India’s National Thermal Power Corporation is seeking to revive the project once a deal can be reached to settle the claims of GE and Bechtel.
Indian gas exploration, petrochemicals and energy company, Gail, is investigating new sources of LNG fuel from Qatar or Indonesia, although the original supply contract negotiated by Enron with Oman and Abu Dhabi remains legally valid.
Coal could make Thai comeback
The next round of independent power projects (IPP) in Thailand due at the end of this year may include coal fired plants after the government gave its consent for their inclusion in bids for plants due to come on line after 2010.
“Although, previously coal fired power generating projects had faced strong opposition from residents in the areas where they were to be located due to environmental concerns, they still are seen as potential power sources when taking into account energy security and pricing stability,” said Viraphol Jirapraditkul, deputy director-general of the Energy Policy and Planning Office.
Natural gas now accounts for 75 per cent of Thailand’s power generation, raising concerns over energy security. The country’s gas reserves are forecast to be depleted within the next 30 years but fears are that this could be sooner if new power projects continue to use gas. From now until 2015, a total of 18 power plants with a combined installed capacity of 18 000 MW are planned to come on stream.
East Asian economies booming
East Asia’s emerging economies are projected to grow by six per cent this year, according to the latest regional update from the World Bank. The report highlights as key drivers the reduced pace of global trade expansion, slowing growth in China, higher oil prices, and the large dollar inflows to the region.
Despite the horrendous loss of life, the update notes that the December 26 tsunami is expected to have a minor impact on overall economic growth in Indonesia and Thailand. The six per cent forecast growth for emerging east Asia is slightly down from last year’s cyclical peak of 7.2 per cent. Much of the region’s expansion has been bolstered by robust global and regional demand growth, supported by low interest rates, although growth is uneven across countries.
“It is important for governments to take advantage of this period of high growth to strengthen the financial sector and the capital markets since these are the institutions that channel foreign capital into the domestic economy,” the report’s author noted.
Nuclear contract competition hots up
The final winner of an $8bn contract to build four nuclear reactors at two power plants in Zhejiang and Guangdong provinces in China is likely to be known in October. The bidders are France’s Areva, US-based Westinghouse, and Russia’s AtomStroyExport.
Final bids were submitted in late February and construction is set to commence a year after signing of contracts. “It’s hard to predict which one will be the final winner” said Fu Manchang, secretary general of the Chinese Nuclear Society.
Recently, Areva signed a €400m ($500m) contract to supply control and instrumentation systems for the third and fourth units of the Ling Ao nuclear power plant extension project in Guangdong Province. Alstom has also won a contract worth €80m at Ling Ao to supply two Arabelle 1000 MW steam turbines and related alternators for phase II.
Power Grid IPO
India’s state run electricity transmission giant Power Grid Corporation is planning an initial public offering (IPO) in September or October of this year in an effort to raise Rs15bn ($345m).
The IPO will take place subject to regulatory approval and would add 5-10 per cent to the corporation’s equity base of Rs32bn. The price band is to be decided later in consultations with the government and merchant bankers, but is expected to be in the region of Rs 45-46 per share. It is unclear whether the IPO would be accompanied by the government divesting itself of a proportion of the company, as was the case with the IPO from NTPC.
Besides the national power grid, the company is planning to focus intently on improving rural power infrastructure. The company currently has 50 transmission projects under implementation with an investment of about Rs140bn.
Power Grid reported a 3 per cent drop in net profit during 2004-2005.
Australia’s environmental minister Ian Campbell has predicted a huge expansion of solar energy as a mainstream electricity supplier as a result of the government’s forthcoming Solar Cities project, which provides funding of A$75.5m ($58.3m) over nine years.
Aveva has become the biggest provider of engineering IT solutions to the $1.8bn Chinese industrial boiler market. The Dongfang, Shanghai Boiler Works and Harbin Boiler Companies have all purchased Aveva’s flagship Vantage PDMS product in deals worth more than $300 000.
China Yangtze River Three Gorges Project Development Corporation has been granted permission to restart a new underground power workshop after construction was halted earlier this year over environmental concerns.
Construction of China’s largest thermal power plant in Zouxian County in East China’s Shandong Province has begun. The $1bn Huadian Power International Corporation plant will be equipped with two extra super critical units rated at 1000 MW each.
Government officials are planning to expedite the financing of nine private power projects in order to address power shortages across the country. These include Reliance Energy’s 3500 MW Dadri project and a 1000 MW Tata power project in Maharashtra.
Indonesia is to revive plans to build two large coal fired power plants that were shelved following the Asian financial crisis. The Tanjung Jati A and Tanjung Jati C plants, each with capacity of 1320 MW, will be built in Jepara, Central Java.
Aboitiz Equity Ventures plans to spend between $300-400m to build three power plants in the next three to four years in anticipation of a power shortage in the Visayas and Mindanao. The company plans to construct both coal and hydroelectric plants.
Macquarie Bank Group has taken a stake in the South Korean energy and utilities sector after purchasing a share in electricity generator Korean Independent Energy Corporation.
South Korea has started work on two nuclear reactors in Gori with a combined capacity of 2000 MW. A total of Won4900 bn ($4.89bn) will be spent on the project which is due for completion between late 2010 and the end of 2011.
Mitsubishi Heavy Industries has received an order for the construction of a 1400 MW gas fired combined cycle power plant from Ratchaburi Power Company to be built 140 km west of Bangkok. Power generated will be sold to EGAT under a 25 year PPA.