Japanese companies gear up for competition
Two major Japanese gas companies and NTT, one of the world’s largest telecommunications groups, are in talks to set up a joint venture to supply electricity to the Japanese market. Enron of the USA has also announced plans to enter the market to take advantage of opportunities presented by liberalization.
Tokyo Gas Co. and Osaka Gas Co. want to join up with NTT to supply electricity to large consumers, and will reach a decision in the next three months. Japan is in the process of deregulating its electricity market – seen as a lucrative opportunity by potential players due to high electricity rates.
Enron said in March that it will establish a Japanese unit to trade in fuel oils, coal, natural gas and electricity. Mitsubishi, Marubeni and Vivendi also have plans to enter the market. Large electricity consumers – representing around 30 per cent of the market – will be free to choose supplier by the beginning of April.
Sri Lanka woos foreign investment
President Chandrika Kumaratunga said in March that the government will eventually allow private sector participation in the electricity sector. The move is part of plans by Sri Lanka to open up key economic sectors to foreign investment and step up reforms to rejuvenate its economy.
This is the first time that the Sri Lankan government has shown willingness to divest its ownership in major state-owned institutions such as the Ceylon Electricity Board (CEB). The Bureau of Infrastructure Investment (BII), the main agency facilitating investment in infrastructure projects, is to take a more proactive stance in attracting large foreign companies to the country.
The power sector will be the first sector to undergo reform. The breaking up of the CEB into separate companies for generation, transmission and supply will be complete by the middle of 2001. Eventually, the restructuring will see the creation of two generation companies and around five distribution companies which will be floated or offered to the private sector.
The CEB estimates that $1.5bn is required to increase its power generation capacity by 920 MW by the year 2004 to meet growing power demand.
1100 MW extension for Taiwan’s Taichung
The Taiwan Power Company (TPC) is to extend its coal fired power plant at Taichung with two 550 MWe units designed and supplied by Mitsui Babcock. The $100m contract announced in March has a significant Taiwanese content as required by TPC.
Mitsui Babcock will start work on the contract immediately, delivering equipment for units 9 and 10 at the plant until 2004. The company’s scope of supply includes boiler furnace and heating surfaces with primary structural steelwork and a burner management control system. It will supply natural circulation opposed fired boilers with a two stage combustion system.
Mitsui Babcock won the order against bids from six other major boiler manufacturers. Commissioning of the new units is likely to start in mid 2003, with commercial operation of unit 9 in mid 2004 and unit 10 in mid 2005.
A$300m project scrapped
US energy group NRG Energy has shelved plans for a A$300m ($183m) power plant in Queensland, Australia. The company cited doubts over the future of the A$3.5bn Papua New Guinea-Australia gas pipeline as its reason for withdrawing the project.
NRG Asia Pacific announced the development in August 1998. “We aren’t going to invest money in power stations for the sake of having a nice monument in Queensland,” said NRG Asia Pacific CEO Keith Hilless.
FGR Corp. closes $500m San Lorenzo financing
International joint venture group FGP Corp. has announced that it has reached financial closure on the San Lorenzo gas fired power plant project on the island of Luzon, Philippines. Construction of the 500 MW plant will be undertaken by Siemens under a turnkey contract signed in March 1999.
FGP, a joint venture between UK energy group BG and First Philippines Holdings Corp., said that the $500m project financing comprises four loan facilities of up to 16 years totalling $375m and equity investments of $125m. The UK’s ECGD is backing $120m of the financing.
The power plant will be fuelled by natural gas from the Malampaya gas fields which are currently under development. It will sell power to Manila Electric Company (Meralco).
Australia: Four of Australia’s leading energy companies are to join forces to form an energy retail company to capitalize on the deregulation of the country’s national electricity and gas markets. United Energy, Energy Partnership, Shell Australia and Woodside Energy will create Pulse Energy to serve customers in the state of Victoria, with the aim of rapidly becoming a national player.
China: A local bureaucrat has been sentenced to death for embezzling $1.4m of funds earmarked for resettling people displaced by the Three Gorges dam project. A second has received a life sentence. Altogether, the National Audit Office found ten cases of misappropriation or embezzlement of funds involving 14 people.
India: Finnish engineering group Wärtsilä is to supply an 81.3 MW power plant to Indian group Tata Electric Company. It will supply five Wärtsilä 46 engines and ancillary equipment under a turnkey contract.
Indonesia: State utility PLN is reported to have stepped up its efforts in fighting electricity theft. During February and March, the utility cracked down on 14 large customers suspected of stealing electricity to the tune of Rupiah10bn ($1.3m). It is also rewarding employees with cash payments for uncovering thefts. PLN said that there was an 11 per cent discrepancy between annual output and metered consumption last year. Theft is also expected to rise with planned hikes in tariffs.
New Zealand: A 60 MW geothermal power plant at Mokai near Taupo in New Zealand has been commissioned by Tuaropaki Trust, the owner of the land on which the plant is situated. The project is the first geothermal plant to be developed by Maori landowners and is also the first to be project financed on a non-recourse basis. The plant was designed and erected by Ormat Group.
Philippines: State-owned power utility National power Corp. has awarded GE Harris Energy Control Systems an energy management system (EMS) contract worth $14m. GE Harris will supply and install fully redundant XA/21 EMS at the National Control centre in Quezon City and at the Visayas Regional Control Centre.
Singapore: The Singapore trade and industry minister has said that the country’s retail power market will be opened to foreign participation in two phases. The market for large business consumers will be opened from April 2001 and that for domestic customers from 2002. These moves will delay the planned privatization of Singapore Power until the end of 2001 or early 2002.