Mirant falls at last hurdle

US energy company Mirant has filed for bankruptcy in the US courts, becoming the latest victim of weak conditions in the USA’s unregulated power and gas markets. The move follows a failed attempt by the company to strike a restructuring deal with its key lenders.

The bankruptcy filing affects Mirant Corp., all of its wholly-owned US subsidiaries and certain Canadian subsidiaries. It does not include the company’s operations in the Philippines and the Caribbean. Mirant’s bankruptcy followed closely behind that of PG&E National Energy Group, which filed for protection in early July.

Mirant has been in discussions with its bank lenders and bondholders for several months to restructure much of its debt, but a deal failed to materialize. This affected the company’s liquidity, forcing it into bankruptcy.

Uncertainty over the recovery of power prices in the US and the slow economic recovery in the country also played a part in the decision to file for bankruptcy, according to Marce Fuller, President and CEO of Mirant.

“We believe this process will allow us to emerge from Chapter 11 as a stronger, more viable and more competitive company positioned for long-term success,” said Fuller. “Over the past 18 months, Mirant has successfully reduced costs, divested non-core assets and implemented operational efficiencies.

“We intend to continue these efforts to improve operations of the business in the weeks and months ahead.”

News digest

BNFL privatization: Plans for partial privatization of British Nuclear Fuels have been shelved by the government, the company confirmed. A state funded body is to take over financial responsibility for cleaning up BNFL’s nuclear liabilities under a draft bill.

Citigroup start power trades: Citigroup is expanding its commodities and energy trading activities to include electricity and natural gas. Sources say David Becker will head a new commodity derivatives unit at Citigroup that will concentrate on oil, natural gas and electricity trade.

Electrowatt acquisition: Electrowatt-Ekono has acquired Ilex Energy Consulting. Electrowatt, which is the energy business group of Jaakko Poyry Group, is active in 20 countries and employs 1100 energy experts.

El Paso takes sale charges: El Paso will take up to $1.73bn in second quarter charges as it sells about $6bn in assets by the end of 2004 in an attempt to survive the energy sector crisis that has started claiming companies such as Mirant.

Enel plans IPO: Enel, Italy’s dominant electricity utility, is aiming to launch an initial public offering for its high voltage transmission network next year that could value the grid up at g4.5bn ($5.1bn).

GE Wind agreement: GE Wind Energy has entered into a one-year turbine sales agreement with PPM Energy of Portland, Oregon, a leading US developer of wind and gas generation projects. PPM will buy 1.5 MW wind turbines from GE for US projects through to June 2004.

Itochu buys Connective: Japan’s Itochu Corp. recently purchased Connective Operating Service Co., a US firm that manages 11 power plants on the east coast of the US. The purchase is aimed at expanding its power plant management business throughout the US.

LES name change: London Electricity Services, the specialist provides of critical energy infrastructures that designs, builds finances and operates private high-voltage electrical networks and main utility connections, has changed its name to EDF Energy.

Siemens works with M&M: Siemens Power Transmission and Distribution is working with the US firm Miner & Miner to establish the provision and servicing of geographic information systems (GIS) for power utilities around the world.

Toshiba expansion: Japan’s Toshiba Corp. plans to expand its overseas power plant related business. The move comes on the back of the company’s first order from Italy’s Endesa and $838m orders from the Middle East.

Duke/Fluor Daniel dissolved

Duke Energy and Fluor Corporation have announced that they are to dissolve their power plant construction joint venture, Duke/Fluor Daniel. Fluor Corp. requested the dissolution of the venture following the continued decline in demand for construction of new power plants in the USA.

Through the 14-year partnership, Duke/Fluor Daniel grew into one of the largest contractors in the world power plant market. The two parent companies are now implementing a plan to gradually close the business over the next two years. This action is not expected to have a material impact on either company.

Fluor said that the dissolution of the partnership will eliminate the “unnecessary costs of a standalone organization”. However, it will continue to pursue and identify opportunities in the power generation market in the USA and around the world.

Toshiba to market H System

Toshiba Corporation has announced that it is to undertake marketing of combined cycle power plants incorporating GE’s H System gas turbine technology in the Japanese market. The move follows the completion of comprehensive field tests of the H System at the Baglan Bay power plant in the UK.

The H System is the world’s largest and most powerful single shaft combined cycle system and is designed to reach 60 per cent efficiency. Japan is seen as one of the largest potential markets for the H System.

GE has already confirmed an order from Tokyo Electric Power Company (Tepco) for the supply of three H System units for its Futtsu Thermal Power Station Group 4 project in Japan. These units are expected to start to come on-line in 2008.

GE Power Systems began development of the H System in 1995. Toshiba has been involved the the machine’s development, design and production since 1998 following the signing of a risk and revenue sharing participant agreement.

Fuel cell JV

MTU Friedrichshafen and RWE of Germany have formed a joint venture to advance their fuel cell operations. The new joint venture, MTU CFC Solutions GmbH, will focus on the introduction of carbonate fuel cell systems on a broad market base, and will attempt to gain a market-leading position in the field of high temperature fuel cells.

RWE Fuel Cells will hold a 25.1 per cent stake in MTU CFC Solutions, which was formerly a wholly-owned subsidiary of MTU Friedrichs-hafen. Both companies are convinced that fuel cells are the key to a sustainable future in power generation.

Within the joint venture, MTU will contribute to the technical side while RWE will provide market access to ensure broad-based introduction of the fuel cell. The venture will focus on MTU’s HotModule carbonate fuel cell technology.

Nexans contemplates Alstom bid

Cable manufacturer Nexans has confirmed that it is considering making a bid for Alstom’s transmission and distribution business.

Nexans is in the process of reorganising its business and recently announced the sale of its distribution activities in Norway. If it makes a bid for the Alstom unit, it will face competition from Areva of France.

Nexans’ new organizational structure will be more customer-focused, replacing the matrix-structure that was organized along product lines.