Poland intensifies sell-offs

Poland is planning to intensify its power sector privatization and liberalization measures, but is unlikely to offer majority stakes in energy producers as previously proposed.

The Treasury is in the process of selling minority stakes in several power generators, and will step up efforts to sell four heat and power plants and four small generators this year. It will take a key step in July towards reducing state control over electricity prices.

The government recently shortlisted five investors for the sale of a ten per cent stake in the Skawina hydroelectric power company. It is also in the process of selling two regional combined heat and power plants – Tychy and Zielona Gora – as well as its largest electricity distributor, the ‘G8’ group.

The Economy Minister said in April that the government has approved a programme that would allow individual power producers to set electricity prices at market levels. The move is expected to result in prices falling by up to 30 per cent, but will require the dismantling of long term power purchase contracts.

France’s SNET and EDF are among those shortlisted to purchase Skawina.

EDF spearheads landmark projects

Electricité de France (EDF) is to invest $171m in the construction of two power plants in Egypt under a financial agreement signed in Cairo in April. The projects represent the largest private power investment in the country and will amount to ten per cent of Egypt’s current installed capacity.

The projects will be supported by $395m in financing from the International Finance Corporation (IFC). They will enter commercial operation in the first half of 2003 and will provide the Egyptian Electricity Holding Company with power for 20 years.

The two plants – Suez Gulf and Port Said East – will be developed by EDF International, a wholly-owned subsidiary of EDF. Each will have an installed capacity of 680 MW, using natural gas as the primary fuel.

The cost of Suez Gulf and Port Said East will be $335m and $340m respectively. The IFC will provide total loans of $90m and syndicated loans of up to $305m.

Saudi Arabia consults ADL on power sector reform plans

The Kingdom of Saudi Arabia has awarded consulting firm Arthur D. Little a contract to advise on the restructuring and commercialization of Saudi Electricity Company (SEC). The move is part of plans to attract $100bn of foreign investment to the Kingdom’s electricity sector over the next 20 years.

Under the multi-phased contract, Arthur D. Little will develop a strategic plan to restructure SEC, the largest utility in the Middle East. If the plan is approved by the government, a second, $4m implementation phase will proceed in late 2001.

“Due to its size, this multi-phased project is the most ambitious restructuring initiative in our region,” commented Tariq A. Al-Betairi, a member of the executive committee of SEC. “We needed someone to develop a plan that will lead us down the most efficient and profitable path to a fully commercialized electricity sector.”

SEC is majority-owned by the government and provides power to over 3.5m customers.

Ukraine sells three power utilities

The Ukrainian State Property Fund has said that AES, Washington Holdings and Vychodoslovenske Energeticke Zavody S.P. (VEZ) of Slovakia have gained majority holdings in state-run power utilities being sold under the country’s privatization programme.

US-based AES has purchased a 75 per cent controlling interest in Kievoblenergo, the distribution company serving the Kiev region, for $45.9m. Washington Holdings has gained control of the Rivne regional utility for $23m, while VEZ won a controlling stake in the Zhytomyr regional utility.

Kievoblenergo is the largest of the 20 power distribution companies that will be sold.

WB warns Kenya on power reforms

The World Bank has suspended a line of credit to Kenya due to the country’s failure to implement the power sector reforms it had promised. The move has raised the possibility of renewed power cuts in the country.

The World Bank said in April 2001 that it had suspended disbursement of $25m of a $75m line of credit that was intended to finance emergency power generation measures. The government has since renewed its promise to implement the reforms, but noted that a lack of financing had delayed the plans.

Kenya has been hit by extensive power cuts over the past year due to drought. The credit facility enabled state utility KPLC to purchase power from emergency generators.

The World Bank has said that it wants to see faster restructuring and rationalization of KPLC’s operations, and will terminate the credit if certain conditions were not met by May 2001.