Pakistan tariff dispute cleared
A settlement of the three year running dispute between the government of Pakistan and Hubco was reached on December 16, 2000. After two days of negotiations, the electricity tariff, the main point of contention, was set at ¢5.6/ kWh. Hubco had initially asked for ¢6.4 but settled for a 15 per cent reduction in return for the government dropping corruption charges made against the company.
The importance of the settlement for repairing the country’s reputation in the eyes of foreign investors was evidenced by a swift reaction in the capital markets. Hubco shares rose nine per cent while local equity prices climbed by two per cent. The agreement is expected to improve Pakistan’s position in next month’s meeting with the Paris Club of leaders to reschedule its $38bn of foreign debt.
The government had appointed a British law firm, Fenwich Elliot, to represent its case against Hubco at the International Court of Arbitration. Foreign minister Shaukat Aziz met directly with the chairman of Hubco in line with International Monetary Fund requirements.
South Korea opens door to ABB
The technology group ABB announced on December 1 that it has signed a cooperation pact with the Democratic People’s Republic of Korea (DPRK) to improve the country’s transmission network. The deal was made in Pyongyang during a four-day visit by ABB’s president and chief executive officer G
The work covers technical cooperation for modernizing DPRK’s national grid, upgrading electrical equipment and control systems in plants and cooperation in the field of wind and solar powered systems.
ABB is expected to open a representative office in Pyongyang by 2001. The agreement is aimed at improving performance in the manufacture of electrical products, such as transformers, circuit breakers, cables and the supply of complementary systems and services.
The deal gives ABB a foot in the door of DPRK, one of the last remaining communist states to open up to the global economy. Lindhal said that “ABB’s strategy is to move early and develop strong long-term local partnerships in emerging markets”.
PowerGen transfers Indian plant to CLP-PI
Hong Kong-based CLP Power International (CLP-PI) is taking over Gujarat Power Energy Corporation (GPEC) as part of a global deal between the parent company CLP holdings and PowerGen. Under the agreement CLP-PI will hold 80 per cent in the joint venture while PowerGen holds 20 per cent of its Indian assets.
The main component of the transfer is the 655 MW Paguthan combined cycle project in Gujarat. It has fuel flexibility, using gas and naphtha and approval to expand up to 1300 MW. Two other plants in the transfer are the 500 MW power projects at Bina in Madhya Pradesh and the Rosa venture in Uttar Pradesh.
PowerGen is selling the plants in order to reduce debts and finance its purchase of LG&E Corp., USA.
Rising budget deficit quickens sale in Philippines
The Philippine government has decided to sell its stake in the Manila Electric Co. (Meralco) as it attempts to raise revenue to reduce a growing budget deficit. Finance secretary Jose Pardo said that the Committee on Privatization has given the go-ahead for a joint sale.
A four per cent stake in the power utility held by the Social Security System (SSS) and the sequestered government stake of ten per cent are worth around Peso9bn ($180m).
The government’s divestment arm had previously deferred the sale of the Meralco stake until Congress passed the Power Reform bill. Pardo said that he “will try to fast track the sale of IBC-13 and Meralco”.
The Department of Finance will need to get a good price in order to earn revenues that will help cover a budget deficit that stood at Peso95.54bn in October 2000 and is expected to rise to Peso126.5bn for the year.
Mitsui Babcock gains cutting edge contract
Mitsui Babcock has been awarded the contract to supply the world’s first vertical tube Benson once through technology to be applied to the boiler at Yaomeng power plant in central China. The plant comprises 4×300 MWe once through units and has been in operation for more that 25 years.
The existing design will be retrofitted by using once through, low mass flux, vertical tubing furnace design with a positive flow characteristic that Mitsui Babcock has been developing with Siemens KWU for more than 15 years.
The new boiler design is expected to increase unit output, allow greater operational flexibility, and also improve efficiency while reducing emissions.