News digest

Australia: State-owned power company Meridian Energy has announced that it will spend up to $360m buying an Australian hydroelectric power scheme. The 10-station Southern Hydro system in Victoria can generate 500 MW of power, or six per cent of the state’s capacity. It is being sold by the US energy giant Alliant, which also owns 19.1 per cent of local generator and retailer TrustPower.

Bangladesh: Following its acquisition of two power generating projects in Africa, CDC Globeleq, the emerging markets power company of CDC Group plc, has agreed to invest $127m in cash to purchase two combined cycle gas turbine plants from from AES Corp. The transaction – for the 360 MW Haripur plant and 450 MW project in Meghnaghat – is valued at $427m, including equity and assumed debt.

India: ABB has won a turnkey Flexible AC Transmission order valued at $17m, from Powergrid Corp. of India Limited. ABB will build a fixed and thyristor-controlled series compensation scheme for PGCIL’s 412 km, 400 kV double-circuit inter-regional tie-line.

Indonesia: ASEAN Business council president Ernest Bower says the successful debt restructuring of power producer PT Paiton Energy will send a positive signal to foreign investors in the country. The EXIM Bank of the US will provide a $381m direct loan to Paiton’s power project.

Japan: Kyushu Electric Power Co plans to supply up to 100 MW of electricity to Tokyo Electric Power Co., which is due to shut down all its 17 nuclear reactors by mid-April. The imminent shutdown of all 17 nuclear reactors run by Japan’s largest utility follows revelations last August that Tepco falsified safety reports to cover up defects at its nuclear facilities.

Korea: The Ministry of Environment signed an agreement to establish a power plant on reclaimed land in Incheon along with Kimpo Energy Co. The 50 MW level thermal plant will have annual electricity production capacity of 390 GWh using gas from the reclaimed land.

Pakistan: China and Pakistan signed an agreement in Beijing to establish two coal-based 600 MW power plants in Sindh, Pakistan.

Philippines: The Power Sector Assets and Liabilities Management Corp. (PSALM) has reported that the number of investors expressing interest to join the bidding for the National Transmission Corp. (Transco) has increased to 14. PSALM president Edgardo del Fonso said they have received ten offers to bid from international power firms. Of these, nine are Asian firms and one is non-Asian.

China to expand faster than expected

China is attempting to tackle imminent power shortages under its tenth five-year plan (2001-2005). The shortages are expected as a result of a 50 per cent faster than expected expansion in its power needs.

In one of two recent contracts, Mitsubishi Heavy Industries, in cooporation with Mitsubishi Corporation, Mitsubishi Electric Corp. and Dongfang Electric Corp. of China, will provide ten gas turbines in China’s first large-scale combined cycle power plant. Meanwhile, GE Power Systems in association with Harbin Power Equipment Co. will provide 13 GE 9FA gas turbines worth $900bn. The power plants are scheduled to begin operation between 2005 and 2007.

Notably, the programme will ease power shortages in Shanghai and Jiangsu, where lack of power is expected to last until 2005. Jiangsu province will face a 3.6 GWh shortage this year and will need some 4700 MW of new capacity this year. China’s economy grew by eight per cent in 2002 and a seven per cent increase is being predicted for 2003.

Accordingly, China planned to start work on adding 25 000 to 30 000 MW of generating capacity each year through 2005. This represents a 7-8 per cent rise a year compared to the five per cent growth called for under an earlier government blueprint.

China is also making progress with its power sector reforms. Guangdong Province will gradually open its power sector to private capital this year.

Meanwhile, the country’s State Electricity Regulatory Commission (SERC) is to set up two or three regional electricity trade centres on a trial basis later this year. The SERC was set up as a watchdog body to overlook market competition and issue licenses to environmentally qualified operators.

Vietnam reforms borrowing rules

The Vietnam government is to allow banks to lend power companies 15 per cent in excess of their assets.

The decision is part of its 2001-2010 power development plan to encourage businesses to invest in power. It is hoped that this will speed up development of the power sector. The country is in need of an additional 48.5-53 TWh by 2005 and 88.5-93 TWh by 2010.

Also, state-owned power company Electricity of Vietnam (EVN) has authorized generators to sell directly to local customers rather than via EVN. This should further encourage domestic and foreign investment in the power sector

KOSEP sale falters

South Korea’s government will now only sell a 20 per cent stake in Korea South East Power Co. (KOSEP) after all potential bidders withdrew.

The move comes after the state originally planned to sell a 34 to 51 per cent stake in Kosep via an auction. This was part of a commitment made to the International Monetary Fund in 1997 in exchange for a $57bn bailout. The initial public offering of Kosep could be finalized before year-end.

Last year state-owned Kepco received 14 letters of intent from local and foreign companies. Four short-listed companies dropped submitted bids due to economic uncertainty. The companies are steel maker POSCO, oil refiner SK Corp., Korea Independent Energy Corp. and Japan’s J-Power. The Ministry said that it had to suspend the bidding as at least two bidders are required to submit bids in order for the process to continue.

Bids for $1.6bn coal fired Malaysian IPP project

Four companies – Mitsubishi, Sumitomo, Siemens and Alstom – have submitted bids for a project to be built by Malaysia’s SKS Power. SKS will develop the $1.6bn, 2100 MW coal-fired plant in the southern Johor state and sell electricity to Tenaga Nasional Berhad.

The Tanjung Bin power station will comprise three plants of 700 MW. The first plant is expected to be operational by August 2006 and the other two by the following year.

The plant will help Malaysia to limit its dependence on gas. Three quarters of the country’s power supply comes from gas. Coal accounts for 12 per cent of the generation.

Separately, an MoU was signed for power sales from the 2400 MW Bakun hydroelectric dam project. The agreement was signed between government-owned Bakun developer Sarawak Hidro and Smelter Asia, a joint-venture company established established by Middle East investors Dubai Aluminium Co. and Gulf International Investment Group (GIIC).

India completes HVDC link

Siemens Power Transmission and Distribution has completed India’s second largest energy transmission project three months ahead of schedule.

The high voltage direct current (HVDC) line transports 2 GW at 500 kV from Talcher in Orissa in the east 1400 km to the south in Bangalore in the state of Karnataka.