Mirant-RRI merger to create 25 GW power producer

 

US wholesale power companies Mirant and RRI are set to merge to create an independent electricity provider named GenOn Energy.

Mirant shareholders will own 54 per cent of GenOn, whose value will be some $3.1bn. Each will receive 2.8 shares in RRI for each one they own. RRI shareholders will own 46 per cent of GenOn.

Shareholders of both companies are yet to approve the merger, as have regulators including the Federal Regulatory Commission. Mirant and RRI must also refinance some of their debts to be able to seal the deal.

The merger will allow cost savings from 2012 of $150m a year. Mirant and RRI power plants use coal, oil and natural gas as fuels. Their combined capacity will make GenOn a producer of about 25 GW of electricity.

Edward R Muller will be chairman and chief executive at GenOn, a position he now holds at Mirant, but will be succeeded by RRI chief executive Mark M Jacobs in 2013 when he retires. GenOn’s home will be in Houston, the base of RRI.

 

Philippines utility eyes power plants

 

Meralco, a power supplier in the Philippines, is aiming to begin its move into the generation of power by buying stakes in newly-privatized power plants before building its own.

Meralco aims to supply large electricity customers with power from sources of their own choice. It expects such demand to start in 2011 after competition begins in the retailing of electricity in the Philippines following the sale by state firm Power Sector Assets and Liabilities Management of the Ilijan and Unified Leyte plants this year.

Meralco is eyeing power plants in its franchise area, which comprises Manila and surrounding provinces like Bulacan, Rizal and Cavite. It also includes parts of the Laguna, Quezin, Batangas and Pampanga.

Regulations allow suppliers to obtain a maximum of 50 per cent of their power from their own facilities.

 

Essar to raise $2bn in London IPO

 

India’s second-largest private sector power operator plans to raise $2bn in London in a move that will be the largest overseas Indian flotation.

Essar Group’s oil and power will be valued at around $12bn, according to the Financial Times, a figure that would give it a place in the FTSE 100. The flotation will see its parent list 20-25 per cent of the available stock.

Essar aims to use the proceeds to fund domestic expansion and upgrade infrastructure in the power generation industrial markets. It wants to increase power generation capacity to 11 470 MW by 2014 to help fill India’s growing gap between energy consumption and generation.

Brothers Shashi and Ravi Ruia control the company, which has $15bn of revenues. The pair are joint fifth on Forbes’s Indian rich list.

Ravi Ruia, chairman of Essar Energy, described the planned floatation of the energy business as a landmark event for the Essar Group and the wider Indian business community. “A London listing gives us an excellent platform to showcase the potential of the Indian market.”

 

Czech politicians ponder the privatization of utility CEZ

 

State-owned Czech utility CEZ could be part-privatized after the nation elects a new government in May.

Both leaders of the country’s two strongest political parties have said in a television broadcast that they would, if elected, be happy to sell 10-15 per cent of CEZ, in which the government owns a 70 per cent stake.

CEZ’s profit last year was Kc51.9bn ($2.72bn), a rise of some 9.5 per cent over the previous year.

 

IHI resumes projects ex-Japan

 

Japan’s IHI will restart the overseas plant engineering procurement and construction operations it suspended in September 2007.

Work IHI had received but has to postpone after receiving more orders than it could cope with and generated large losses will now resume. IHI isa that it would now start taking orders again in Southeast Asian countries, including Singapore, Vietnam and Malaysia, as demand for the expansion of power infrastructure is strong in the region.

The decision to begin the work again follows IHI’s establishment of a system for closely monitoring and managing plant projects to prevent costly schedule overruns.

 

Vattenfall should list, says Josefsson

 

The former head of Swedish state-owned power utility Vattenfall said the company should be listed.

Lars Josefsson, who left Vattenfall last month, said a stock market listing was necessary for the company to realize its full potential. He said its development across Europe and the evolution of a common European policy on energy and climate policy means it is time for the company to bring in non-Swedish investors.

He said Vattenfall’s statistically odd position as a wholly state-owned company may be unsustainable, although he added that the decision to float was the government’s alone.

 

•••

 

Nuclear fusion: Babcock & Wilcox is combining its Nuclear Power Generation group with its Modular Nuclear Energy group. The latter’s president and CEO Christopher M. Mowry will be president of the new entity, called Babcock & Wilcox Nuclear Energy.

Green is good: RWE Innogy and 26 municipal utilities will co-operate in developing renewables projects in Europe. Their joint venture, GECCO, is likely to have as its first project a 20 MW wind farm in Scotland.

Party’s over: South Africa’s ruling party is to sell its stake in Hitachi Power Africa, which has won a contract to supply boilers to utility Eksom’s new Medupi power station in Limpopo for R38bn ($5.1bn). The ANC’s stake in the project is R5.7bn.

Powerful bonds: Canada’s Hydro-Quebec is likely to sell $3bn-$4bn in bonds over the next five years to fund expansion of its power generating capacity. The utility is running a five year plan worth $25bn to build new plants to boost the electricity it exports to the USA.

Buy Belgian: Holland’s exchange company APX will purchase Belgium’s power bourse Belpex, which traded €430m ($575m) worth of day-ahead contracts last year. In 2006 both exchanges linked their day-ahead electricity markets with those of France.

Smart move: ABB is joining Deutsche Telekom division T-Systems of Germany to develop solutions for smart grids.

Nuclear fission: US nuclear power company Westinghouse is splitting its Research and Technology Unit into three parts: R&T Strategy, Nuclear Energy Innovation Leadership and R&T operations. The company says the restructuring follows growing demand worldwide for secure and clean energy.

Small is beautiful: Windpower developer West Coast Energy of the UK is diversifying by partnering with microgeneration company Ensign Energy. Their joint venture Ensign Energy (West Coast) will install renewable energy equipment, including heat pumps.

Asset sale: The UK’s BG Group has sold its 50 per cent stake in the 1140 MW Seabank gas fired power plant in Bristol to a subsidiary of Cheung Kong Infrastructure Holdings for £211.7m ($320.7m).

 

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