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Tractebel aim to realign Asia assets

22 Jan 2002 – Belgium global energy group Tractebel is seeking to realign part of its Asia business by selling electricity generating interests in Thailand and at the same time, bidding for natural gas and LPG interests being sold by an Enron subsidiary in South Korea.

Tractebel said today it was planning to sell its cogeneration plants in Samut Prakan and at Nong Khae in Saraburi, which in the past it has valued at $270m. On Monday Tractebel said it have made an approach for Enron’s 50 per cent interest in SK-Enron. A joint venture with SK Corporation, Korea’s third largest industrial conglomerate. It declined to disclose the value of the bid.

Johan Saeger, the senior vice-president of Tractebel Asia Co who oversees strategy and portfolio management said, “The sales would lead to a better balance of risks given the company’s heavy reliance on the power business.”

Tractebel is expected to face competition from Royal Dutch/Shell, the Anglo-Dutch oil group and US energy company El Paso, for the South Korean business. SK Enron controls about 25 per cent of South Korea’s natural gas market and about half the NPG market. It has stakes in 11 affiliates. Including a 46 per cent holding in SK Gas Co., the LPG provider.

Tractebel has operations in Singapore as well as Thailand. It has indicated that growth in Asia Pacific is a high priority and has expressed interest in power projects in China.

The framework for selling the Thai power plants will be completed in April and Seager said that the proceeds would be used to fund business expansion on the industrial eastern seaboard where there is a growing demand for electricity.

“We expect to raise the capacity by 15 percent, or 150 to 200 megawatts, to absorb rising demand,” said Peter Termote, the company’s vice-president in charge of business development in the Asia-Pacific region. As part of its new focus, Tractebel planned to establish a holding company in Thailand to oversee its total of 12 operating units in Thailand and Laos.

Saeger said there were alternative ways to streamline its local operations worth $900m. One was to set up a new holding arm and the other was to take a direct stake in each project.

“We initially prefer the holding company as we want to list on the Stock Exchange of Thailand,” said Saeger.

In a separate development, Electrabel, the Belgium power group in which Tractebel holds a 42 per cent stake, said it was in talks to acquire Enron’s assets in Spain.

The assets would include Enron’s Arcos de la Frontera project in Cadiz – a 1200 MW combined-cycle gas-fired power plant that is due to open in 2004.

Work on the €450m ($397.9m) plant was due to start in mid 2000 but an Electrabel official said there was little to see on the ground to date. Enron has already signed a long-term contract with Enagas, the Spanish natural gas distributor, for the delivery of fuel to the plant.

“This project seems interesting to us and we hope this can come to a positive result. We are being very careful about the legal aspects of this deal, given Enron’s current position, and there are still a lot of points for us to check,” said the Electrabel official.